Short covering can push Nifty towards 12,200: SMC Global

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Shitij Gandhi

Last week Indian markets rallied and hit all-time highs as investors remained buoyed with optimism after the Narendra Modi-led government was re-elected for a second term.

This week as well we have seen follow up buying in Nifty that took the index close to 12,000. At the current juncture, Call writers are holding the maximum open interest of nearly 40 lakh shares in May series that should act as an immediate hurdle. However, if we manage to give a decisive move above that, then further short covering can push Nifty towards 12,200 in coming sessions.

The overall sentiment for Indian markets is still buy-on-dips as bears are completely on their backfoot now.

From a technical viewpoint, strong support area for Nifty is seen in 11,800-11,700 zone, and we believe that as far index trades above that, the momentum towards all-time highs can’t be ruled out.

Here are three buy ideas:

BEML | Rating: Buy | Target: Rs 1,105 | Stop loss: Rs 930 | Upside: 11 percent

After making a Double Bottom pattern around Rs 780 on daily charts, the stock made a stunning run towards Rs 1,000 in a short span of time. On broader charts as well, the stock has been seen trading in a rising channel and seen forming higher high & higher bottom pattern.

This week, the stock has managed to give a fresh breakout above the long-term moving averages on weekly charts that suggests next run up into prices. So, traders can accumulate the stock in Rs 995-1,005 zone for the upside target of Rs 1,105 with stop loss below Rs 930.

Ujjivan Financial Services | Rating: Buy | Target: Rs 396 | Stoploss: Rs 325 | Upside: 13 percent

After regaining momentum above its long-term moving averages on weekly charts, the stock was seen consolidating in a broader range of Rs 300-350 from last more than eleven weeks. However, this week the consolidation breakout above the key resistance levels of Rs 350 has been observed alongside marginally higher volumes. It suggests upswing in coming sessions. So, traders can accumulate the stock in the range of Rs 350-355 for the upside target of Rs 396 with stop loss below Rs 325.

Pidilite Industries | Rating: Buy | Target: Rs 1,390 | Stop loss: Rs 1,170 | Upside: 11 percent

After testing Rs 1,300 in April, the stock witnessed sharp sell-off and once again slid towards Rs 1,100 to take support at its 200-day exponential moving average. After taking support, the stock made a V shape recovery from lower levels to once again reclaim Rs 1,250 this week.

We have also observed long build up this week along with positive divergence on secondary oscillators. So, traders can accumulate the stock in the range of Rs 1,250-1,265 for the upside target of Rs 1,390 with a stop loss below Rs 1,170.

The Author is Senior Research Analyst at SMC Global Securities.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.