Hot Stocks | India Cements may give up to 21% return in short term

Benchmark index Nifty saw rising wedge pattern breakdown on the daily chart on May 15 and the rally we witnessed on May 20 can be considered as a pullback of the bearish setup.

Nifty settled below its extended lower band of the rising wedge pattern for the fourth straight trading session, trading below its short term 21-day EMA on the daily interval.

Its major technical indicators remained in sell mode and overall market breadth too remained negative for the past couple of days.

For the last two trading sessions, Nifty continued to trade within a range of May 18 candles. This set up in Nifty gives a clue of a pullback rally in index.

We believe the index will remain under pressure as major indicators are in the favour of bears.

In the case of decline, Nifty will find support around 8,800 and then 8,500. On the higher side, the index will face an initial hurdle around its 50 days EMA placed around 9,450 level.

As the market volatility is on the higher side, one should stick to hedge strategy in the future and options trade.

Bank Nifty, too, has witnessed bearish head & shoulder pattern breakdown and the index is currently stained below its neckline resistance on a daily scale.

The underperformance of the banking index is easily visible on the Relative Strength (RS) indicator. For the past few trading session, a gap up opening in Nifty is getting hit by selling in the banking index.