The Nifty50 index on the daily chart has been trading in a strong uptrend with higher low and higher high formation intact, and has formed a Bullish Engulfing candlestick pattern which is a bullish reversal pattern.
The index might consolidate in the 16,300-16,800 range, where bulls and the bears are sitting.
The undertone remains bullish as long as the index holds the 16,300 level on the downside on a closing basis. The hurdle of 16,800, if taken out, will see sharp short covering towards 17,200.
On the weekly chart as well, the Nifty has given a breakout from falling trend line which confirms the bullishness.
The Bank Nifty index rebounded from the support zone of 36,300 and is in a strong uptrend with possible targets of 37,500 on the upside. The index has been the leader in the current rally and the outperformance is likely to continue.
Here are three buy calls for next 2-3 weeks:
Gujarat Alkalies and Chemicals: Buy | LTP: Rs 726.1 | Stop-Loss: Rs 690 | Target: Rs 760-790 | Return: 9 percent
The stock on the weekly chart has taken a support on the rising trendline which confirms buyers strength at the lower levels. The stock on the daily chart has been consolidating in a tight range and is on the verge of a breakout.
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The breakout which is placed at Rs 742 coincides with its 200-DMA (day moving average) leading to a change in trend. The RSI (relative strength index) indicator on the daily chart is also showing a strong uptrend with a positive crossover.
Nocil: Buy | LTP: Rs 285.55 | Stop-Loss: Rs 265 | Target: Rs 315-320 | Return: 12 percent
The stock on the weekly chart has given a strong breakout from a rising parallel trendline with strong volume participation. The momentum oscillators such as RSI and Stochastic are trading in a strong buy zone.
The stock on the daily chart has given a breakout from ascending triangle pattern which is considered to be a bullish reversal pattern. The stock is on the way to test its all-time high level of Rs 320.
HDFC Bank: Buy | LTP: Rs 1,404.4 | Stop-Loss: Rs 1,350 | Target: Rs 1,450-1,500 | Return: 7 percent
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The stock after a massive underperformance is showing signs of reversal on the daily chart. The stock since the past couple of months has been consolidating in the range of Rs 1,300-1,400 and is showing fresh breakout.
The RSI indicator has entered the buy zone of 60 which confirms the strong undertone. The MACD (moving average divergence convergence) has given a zero line crossover on the daily chart which confirms the buy signal.
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