Vinay Rajani, Senior Technical & Derivative Analyst, HDFC Securities
After rising for three straight weeks, the Nifty has managed to continue with a bullish momentum in the start of the current week also. The Nifty has managed to surpass the psychological resistance placed at 18,000. From the bottom of 16,410, registered on December 20, the Nifty has shown recovery of almost 10 percent in the span of 16 sessions, while Bank Nifty has recovered 13 percent from the low of 34,018 in the same period. Bank Nifty has formed bullish rounding bottom formation on the daily charts, which indicates more upside room for the index in the coming days.
Last Week, it surpassed the crucial resistance of the previous swing high placed at 17,640. The Nifty has also surpassed the 61.8 percent Fibonacci retracement level placed at 17,766, which has negated all the bearish developments on the medium-term chart.
The benchmark is now placed above 5, 10, 20, 50, 100 and 200 DMA (day moving average), which indicates the bullish trend on all time frames. On the weekly charts, the Nifty has broken out from ‘Flag’ pattern, which indicates a bullish continuity. Previous resistance of 17,640 is now expected to act as a short-term support for the Nifty going forward.
Indicators and oscillators like MACD (moving average convergence divergence), RSI (relative strength index) and DMI (directional movement index) have reached a bullish territory and showing strength in the current daily and weekly uptrend.
To conclude, we believe that the Nifty is in uptrend and dips should be utilised to create longs positions. Support for the Nifty is seen at 17,640. Upside targets for the Nifty are seen at 18,210 and 18,610.
Here are three buy calls for next 2-3 weeks:
Birla Corporation: Buy | LTP: Rs 1,457.95 | Stop-Loss: Rs 1,410 | Target: Rs 1,640 | Return: 12.5 percent
A downward sloping trend line breakout is seen on the weekly chart. Price has broken out from the last eight weeks’ consolidation. Price breakout is accompanied with a jump in volumes.
The primary trend of the stock has been bullish with higher tops and higher bottoms. The stock is trading above all important moving averages. Weekly RSI has registered crossover on signal line. Weekly +DMI has crossed –DMI on the upside.
Chambal Fertilisers and Chemicals: Buy | LTP: Rs 432.80 | Stop-Loss: Rs 405 | Target: Rs 499 | Return: 15.3 percent
Stock has broken out from symmetrical triangle pattern on the daily chart. Price breakout is accompanied with rising volumes. Stock has surpassed the previous swing high resistance of Rs 424.
Primary trend of the stock has been bullish with higher tops and higher bottoms. The stock is trading above all important moving averages. Indicators and oscillators have turned bullish on the daily charts.
Tata Coffee: Buy | LTP: Rs 215.65 | Stop-Loss: Rs 195 | Target: Rs 257 | Return: 19.2 percent
Downward sloping trend line breakout is seen on the daily chart. The stock broke out from the resistance on December 27, which was followed by three days of running correction. On December 31, the stock resumed the uptrend by forming a ‘Rising Three’ candlestick pattern on the daily chart.
Price breakout is accompanied with jump in volumes. Primary trend of the stock has been bullish with higher tops and higher bottoms. The stock is trading above all important moving averages. Indicators and oscillators have turned bullish on the daily charts.
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