Chart Busters: Top trading set-ups to watch for Tuesday

The equity markets displayed a high degree of uncertainty as they opened lower, got weaker as the day progressed, recovered all their losses but still ended up on a negative note. Despite a 280-point recovery from the low point of the day and trading in the positive territory, the headling index still ended negative with a net loss of 69.65 points or -0.40%. The index has continued forming a lower top and lower bottom on the charts, it has also tested the confluence area of the support trend lines. While the lead indicators remain neutral, the level of 17200 is likely to act as inflection point for the NIFTY. It would be crucial for the index to keep its head above this point; failing which, it will open up room for testing 17000 levels on the lower side.

INFY

INFY corrected sharply from the high point of 1950, it tested lows near 1675 levels towards the end of January and since then has been consolidating in a defined range. The stock has created a consolidation zone between 1675-1720 levels; the most recent price action has seen the stock trying to establish a potential reversal point and resume its rally. The RS line against the broader markets is flattened and is seen gradually rising. The volumes have stayed near their 25-day average. The daily MACD has shown a positive crossover; it is now bullish and above the signal line. The RSI is neutral against the price. If the technical pullback happens on the expected lines, the stock may test 1765 – 1800 levels subject to its ability to keep its head above 1680.

DRREDDY

DRREDDY has been relatively underperforming the broader markets. It has been consolidating in a narrow 4180-4380 range for the past couple of days in the process of establishing a potential bottom for itself. The stock is presently in the improving quadrant of the RRG when benchmarked against the broader NIFTY 500 Index. A fresh PSAR buy signal has emerged and there are high possibilities that the stock may attempt a technical pullback. The daily MACD is in continuing buy mode. If the stock is able to stay above the 4200 levels, it may test 4375 and 4325 levels over the coming days.

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