Disclaimer: This article is written by Hitesh Rathi, technical analyst – equity & derivatives at Angel One. Views expressed are his own. Readers’ discretion is advised.
Black Box
The decline in Black Box Ltd. over the past three months offers a lucrative opportunity to enter a technically uptrending stock, following a 150 per cent rise in 2 months. The stock has also retested a key support and a prior breakout level, offering a lucrative risk-reward proposition. A bullish column reversal on its 3 per cent into 3 Point and figure charts points towards a cessation of its prior downswing and resumption of its prior trend. Hence, we recommend to ‘Buy’ BBOX around ₹800-₹795, with a stop-loss of ₹707 and a target price of ₹950-₹980
Adani Ports & Special Economic Zone
The two-month retracement, accompanied by receding volumes, not only points towards an absence of any meaningful supply, but also indicates that the decline was a retest of its prior price breakout zone and its 200 DSMA.
The stock is now pointing towards a resumption of its prior uptrend and cessation of its 2-month downtrend, confirmed by the formation of a column reversal pattern on its Point and figure chart. A bullish column reversal pattern on its Relative Strength charts, when plotted against the NIFTY 500 universe, accompanied by a new bullish Relative Strength breakout, points towards the emergence of new resilience in the stock. Hence, we recommend Adani Ports around ₹1,765-₹1,760 with a stop loss of ₹1,570 and a target price of ₹2,000-₹2,010
Nifty outlook
It was another disappointing week of trading for Nifty, as prices continued to decline, with the losing streak now extending to the fifth consecutive week. While the week began on a muted note, selling pressure accelerated as the week progressed, particularly during the first three trading sessions.
Thereafter, some resilience among buyers on the penultimate day helped cap the losses, while a smart intraday recovery on the final day, following a significant gap-down opening, helped recoup all of the overnight losses. The index eventually settled at the 23,398 mark, registering a weekly loss of 2.09 per cent.
While the technical setup and trend continue to remain fragile and aligned to the downside, the recovery observed during the final trading session, coupled with prices approaching the crucial 23,200–23,000 support band, suggests that a near-term bounce cannot be ruled out.
A multitude of factors underscore the possibility of an upcoming bounce. Most technical indicators are now pointing towards oversold readings, reducing the likelihood of an extended decline from current levels. At the same time, breadth indicators, which track the overall health of the market, highlight the extent of the ongoing weakness, with more than 80% of stocks in the NIFTY 50 basket and nearly 70% of stocks in the NIFTY 500 currently in a downswing. In such a scenario, with prices approaching key support levels and market breadth showing significant deterioration, we anticipate a short-term bounce in the coming sessions.
That said, such a recovery should not be construed as a trend reversal. A meaningful reversal in the broader trend, at this point, still appears to be a far-fetched possibility. In terms of levels, the 23,450–23,500 band is likely to act as an immediate hurdle, followed by a stronger resistance zone at 23,600–23,650, which had previously acted as support. On the downside, the 23,200 level, marked by the current weekly low, is likely to provide an immediate cushion, followed by stronger support in the 23,100–23,000 band.
This zone is significant not only as a prior swing low but also as a key psychological support level. While the broader markets have encountered intense selling pressure over the past couple of weeks, a notable pocket of strength has emerged in the Small Cap and Microcap space, which has remained relatively resilient and has not witnessed any meaningful profit booking during this period. Exploring opportunities within this universe, while maintaining a strict focus on risk-reward parameters, could offer the potential to generate superior returns going forward.
