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By surpassing the resistance of 8,600 in the previous week, Nifty also confirmed the bullish inverse head and shoulder pattern breakout on the daily line charts.

April 15, 2020 / 07:26 AM IST
 
 
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Vinay Rajani

From the bottom of 7,511 registered on March 24, 2020, Nifty has seen a pullback of more than 21 percent, which is lower as compared to developed markets like Europe and the US.

Recently, Nifty has managed to surpass the resistance of its 20-days exponential moving average (EMA), which is currently placed at 9,005.

Nifty has also managed to register a higher top above 9,038, preceded by a higher bottom at 8,055 on the daily charts.

By surpassing the resistance of 8,600 in the previous week, Nifty also confirmed the bullish inverse head and shoulder pattern breakout on the daily line charts.

The projected target of this pattern comes at 9,700-9,800 levels for Nifty. However, before that, the level of 9,390 could act as a resistance, which happens to be the 38.2 percent Fibonacci retracement level of the entire swing seen from an all-time high at 12,430 to March low at 7,511.

A sustained trade above 9,390 could push Nifty towards the target of 9,700-9,800.

Though markets are passing through the phase of uncertainty about whether the recent recovery would sustain or not, there are some stocks and sectors, which are showing extraordinary strength in their price movements.

These opportunities should not be missed by traders as well as investors. One of such sectors is pharma, where ample opportunity lies in the bunch of quality stocks.

Though pharma stocks soared recently and look overbought on the short-term charts, traders should wait for those stocks to come down to take fresh entry for medium to long-term returns.

Nifty Pharma index formed its peak 5 years back in April 2015 and from that peak, the pharma index is still down by 35 percent at 9,070. So, better late than never and it is advisable to increase the allocation in pharma stocks.

Many pharma companies are placed well on the long-term charts and should be on radar along with the large domestic companies.

Coming back to the benchmark index, Nifty should hold its level above 8,600 for the extension of the pullback.

If it succeeds, then it could extend the upswing up to 9,700-9,800 targets in the next couple of weeks.

Here are three buy recommendations for the next 3-4 weeks:

Bharti Airtel | Buy | LTP: Rs 510.50 | Target price: Rs 580 | Stop loss: Rs 465 | Upside: 14%

The stock is one of the strongest Nifty stocks, which holds its level above its 200-day moving average.

Bharti Airtel’s move remained resilient during the downtrend of the market witnessed in the current calendar year.

The stock is placed above all important moving average parameters. The stock price has given bullish 'cup and handle' pattern breakout on the weekly charts.

Moreover, the stock is nearing its all-time high, placed at Rs 568 odd levels. It is advisable to buy the stock in two trenches, one at the current market price and second at Rs 490.

Pfizer | Buy | LTP: Rs 4,444.95 | Target price: Rs 5,200 | Stop loss: Rs 4,000 | Upside: 17%

Pharma sector has come out as a real outperformer in the current scenario.

Pfizer has been bullish with higher tops and higher bottoms on the monthly charts. The stock has been consolidating in the range for the last 5 months. The stock witnessed a running correction towards its 200-DMA, took support and resumed its uptrend towards the upper band of the consolidation.

Indicators and oscillators, on the daily charts, are indicating back of momentum in the stock price and there are good chances that the stock will surpass the previous all-time high.

It is advisable to buy the stock in two trenches, one at the current market price and second at Rs 4,200.

GlaxoSmithKline Pharmaceuticals | Buy | LTP: Rs 1,449.95 | Target price: Rs 1,680 | Stop loss: Rs 1,290 | Upside: 16%

The stock price surged more than 10 percent on April 9, 2020, with higher volumes. There has been a significant rise in volumes during the last 3 sessions.

The stock price has broken out from the consolidation phase of the last seven sessions and has surpassed the previous top resistance on the daily charts.

The stock has also surpassed its 100-days EMA resistance. It formed a bullish double bottom at Rs 970 odd levels on the weekly charts and reversed north.

On the monthly line chart, the stock took support on the upward sloping trendline adjoining major bottoms of the year 2008 and 2018. It is advisable to buy the stock in two trenches, one at the current market price and second at Rs 1,350.

(The author is Senior Technical and Derivative Analyst at HDFC securities)

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

Moneycontrol Contributor
Moneycontrol Contributor
first published: Apr 15, 2020 07:01 am

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