Nazara’s Uptrend May Be A Bull Trap, Warns SEBI RA Aditya Thukral – Technicals Signal Caution

While Nazara Technologies' stock is currently in a short-term uptrend, forming higher highs and higher lows, its chart structure doesn’t offer an attractive buying opportunity, according to SEBI-registered analyst Aditya Thukral.

Chasing a breakout with the expectation of continued upward momentum seems risky at this stage, Thukral added.

Despite increased trading volumes in recent weeks, price action has remained largely range-bound, while the appearance of a negative divergence in prices and the relative strength index (RSI) adds to the caution, he said.

According to the Elliott Wave analysis, the price formed a corrective 3-wave structure from the October 2021 high of ₹1,678, bottoming at ₹475.40. This was followed by a zig-zag recovery in a (a)-(b)-(c) pattern, labelled as wave W, peaking at ₹989.40.

A drop to ₹591.50 represents wave X, and the current upward move appears to be wave Y. However, wave Y cannot exceed 161.8% of wave W, which projects a limit at ₹1,423.15. The overlapping nature of the rally further confirms that this move is corrective, Thukral noted.

In the first scenario, the stock may extend its rise as part of a triple-three corrective pattern but would eventually revisit the wave W territory near ₹989.40 before any sustained breakout above ₹1,423.15. In the second scenario, a deeper correction could unfold, potentially testing or even breaking below the previous low of ₹475.40.

Given that both scenarios suggest downside risks, it's prudent to avoid fresh long positions for now, Thukral suggested.

The stock closed at ₹1,308.80 on Friday. Year-to-date (YTD), it has gained nearly 30%.

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