Santosh Meena, Head of Research at Swastika Investmart
The Nifty is continuing its southward journey on the back of selling in heavyweights HDFC twins and IT marques where the index has slipped below its 200-DMA (days moving average) which is a cause for concern. However, 16,900-16,800 is also a critical demand zone because 16,900 is a 50 percent retracement of the previous rally while 16,800 is a horizontal support level.
The derivative data is also indicating an oversold market which is one hope for the bulls for the short-covering rally. If Nifty manages to hold the 16,900-16,800 zone then we can expect a bounceback where 17,150-17,300 will be an immediate supply zone while 17,500 is a key hurdle.
Bank Nifty has also slipped below 200-DMA, however, 36,000 is a psychological support level. Below this, we can expect more pain towards the 35,000 levels. On the upside, 36,700-37,000 is an immediate supply zone while 37,500 is the next hurdle.
FIIs selling could be the main reason behind the last-hour sell-off. Apart from FIIs selling, rising energy prices, geopolitical concerns, and rising US bond yields are key concerns for the market.
Here are three buy calls for next 2-3 weeks:
Jash Engineering: Buy | LTP: 701 | Stop-Loss: Rs 620 | Target: Rs 850 | Return: 21 percent
The counter is in strong bullish momentum where it is resuming this momentum followed by a breakout of 9 months consolidation. The breakout comes with a big bullish candlestick and high volume that indicates the beginning of a fresh expansion phase.
On the upside, Rs 850 looks immediate target while it may move into 4 digits in the coming months. On the downside, a breakout level of Rs 620 will act as an immediate support level.
Southern Petrochemical: Buy | LTP: Rs 80.25 | Stop-Loss: Rs 73.5 | Target: Rs 94 | Return: 17 percent
The counter is in a classical uptrend with higher high and higher lows formation where it is bouncing back from its 20-DMA after a minor pullback to resume its uptrend.
On the weekly time frame, there is a breakout of a bullish Cup and Handle formation. Most of the momentum indicators are positively poised to support the current strength of the trend.
Jamna Auto Industries: Buy | LTP: Rs 107.3 | Stop-Loss: Rs 101 | Target: Rs 121 | Return: 13 percent
The counter is outperforming the Nifty Auto index where it has created a strong base at its 200-DMA and now it is trading above its all-important moving averages.
It is likely to witness a breakout of a bullish Inverse Head and Shoulder formation on the daily chart for a move towards a 52-week high. Momentum indicators are also positively poised to support the current strength of the trend.
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