NIFTY Index Chart Analysis

The NSE benchmark Nifty 50 index has been on its longest losing streak in recent history, falling for eight consecutive sessions. The selling pressure seemed relentless as the index opened lower on Monday, slipping below its previous swing low of 22,788.90 and making a fresh low at 22,725.45. However, the index managed to recover from these lower levels, aided by the formation of a positive divergence on the 14-period daily RSI. Despite this relief, the bounce lacked strong follow-through buying.[EasyDNNnews:PaidContentStart]

Even though the index posted a higher high compared to the previous session, it still ended with modest losses on Tuesday, indicating that 23,000 remains a strong resistance level. From a technical standpoint, not much has changed over the last few sessions, despite buying interest emerging at the lower levels. A detailed pattern analysis shows that Nifty faced resistance at the 50-week moving average and resumed its downward trend. The inability to sustain gains above this crucial level highlights the underlying weakness in the market.

Additionally, the formation of lower highs and the index’s failure to break out of the descending channel—pulling back after testing its upper boundary—is not a positive sign. The broader market sentiment remains weak, as the Nifty Mid-Cap and Small-Cap indices continue to underperform. Looking ahead, the index is at a critical inflection point. If Nifty breaches its recent swing low of 22,725 on a closing basis, it could trigger a swift correction of 200-300 points.

In such a scenario, finding a market bottom could take considerably more time, possibly extending into mid-year, and may inflict further pain on investors. A break below this level could push the index towards 22,300-22,400, where the 89-week EMA is positioned. If this support fails to hold, the index could slide further to the psychological level of 22,000, potentially testing 21,882, which aligns with the Anchored VWAP from the March 2023 swing lows. This level has historically been of strong support, and if the index stabilises around this point, it could set the stage for a potential recovery.

However, for a sustained rebound, a base formation is crucial, along with a cooling-off in India VIX. For now, the 22,720-22,800 zone remains of crucial support, followed by 22,300-22,400. On the upside, resistance is placed at 23,050, followed by 23,250 and 23,500, indicating that resistance levels are present at every 200- point interval. Given the current technical setup, market participants should approach the coming sessions with heightened caution. A decisive breach of the 22,720-22,800 zone could intensify selling pressure.

Given the prevailing conditions, it is advisable to use any technical rebound as an opportunity to protect profits rather than aggressively chase fresh long positions. New buying should be undertaken selectively, with a strong emphasis on risk management. Leveraged exposures should be kept at modest levels to navigate the increased volatility effectively. With market sentiment appearing fragile and downside risks persisting, a highly cautious approach remains warranted in the near term.

STOCK RECOMMENDATIONS

AARTI PHARMALABS LTD. ........................... BUY ...................... CMP ₹807.70
BSE Code : 543748
Target 1 .... ₹880 
Target 2 ..... ₹934 
Stoploss....₹718 (CLS)

Formerly known as Aarti Organics, Aarti Pharmalabs Limited (APL) was established in 1984 as a wholly owned subsidiary of Aarti Industries Limited and later demerged into a separately listed entity in October 2022, effective July 2021. As part of the Aarti Group, a diversified chemical conglomerate with a turnover of Rs134 billion (FY23), APL is an established and internationally recognised manufacturer of generic active pharmaceutical ingredients (APIs), Xanthine derivatives, and offers CDMO plus CMO services.

Technically, Aarti Pharmalabs’ stock witnessed a breakout from a Stage 3 consolidation pattern that lasted 22 weeks in the first week of February. This breakout was accompanied by strong volume—more than eight times the 20-week average per week—indicating significant participation in the direction of the trend. Following the breakout, the stock consolidated at higher levels, re-tested the upper boundary of the consolidation pattern, and then surged to a fresh all-time high. The 14-period weekly RSI has entered bullish territory and is on an upward trajectory.

Meanwhile, the 14-period daily RSI has shifted into the super bullish zone, further reinforcing positive momentum. The daily MACD is pointing northward and remains above its nine-period average, validating a bullish bias in the stock. Given this technical setup, the stock has the potential to reach ₹880–934, while traders can maintain a stop-loss at ₹718.

BAJAJ HEALTHCARE LTD. ......................... BUY ....................... CMP ₹635.40
BSE Code : 539872
Target 1 ...... ₹720 
Target 2 ..... ₹740 
Stoploss.....₹580 (CLS)

I ncorporated in 1993, Maharashtra-based Bajaj Healthcare Limited (BHL) is one of India’s large-scale and vertically integrated pharmaceutical manufacturers for qualityconscious customers. BHL is engaged in the manufacturing of active pharmaceutical ingredients (APIs), intermediates, finished dosage forms and nutraceuticals.

Technically, the company witnessed a breakout from a 61-week-long cup pattern in December. The breakout occurred on above-average volume, indicating strong buyer interest in the stock. The depth of the pattern is approximately 49 per cent, reflecting a substantial base formation. Recently, the stock found support around the 10-week moving average (MA), which is on an upward trajectory—an encouraging sign for its future performance. From a technical standpoint, the stock is comfortably positioned above its key moving averages, trading approximately 5 per cent above the 50-day moving average (DMA) and 48 per cent above the 200 DMA.

From an O’Neil methodology perspective, the stock has an EPS rank of 65, which is a fair score but suggests the need for earnings’ improvement. It holds an RS rating of 94, which is great, indicating strong outperformance compared to the other stocks. Additionally, the buyer demand rating of A+ reflects robust recent demand for the stock. The master score of B is close to being the best, further reinforcing its positive outlook. Considering these factors and the positive growth triggers that the company has the potential to pull, this stock can be bought with a stop-loss at ₹580, targeting a price range of ₹720–740.

*LEGEND:  ◼ EMA - Exponential Moving Average.  ◼ MACD - Moving Average Convergence Divergence  ◼ RMI - Relative Momentum Index  ◼  ROC - Rate of Change  ◼ RSI - Relative Strength Index
(Closing price as of February 18, 2025)

Disclaimer : Above recommendations are based on various technical parameters and any fundamental input has not been considered for the recommendations. Follow strict stop loss for the recommendation.

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