Vinay Rajani
Nifty has been trading in the rising wedge pattern on the daily charts which is contracting and that is why the range of Nifty is getting narrowed down as the time progresses.
The lower band of this wedge projects the support around 9,200 levels, while the higher band of this wedge is placed at 9,600-9,650.
Before 9,650, there is a short-term resistance placed at 9,390, which is not only the previous bottoms but also happens to be the 38.2 percent Fibonacci retracement of the entire fall which Nifty has witnessed from 12,430 to 7,511.
Any suitable level above 9,650 could extend the rally towards 9,970 which is the 50 percent retracement levels.
RSI oscillator on the daily chart has reached above the benchmark level of 50 which indicates the sustainability of the trend.
The MACD indicator has also been trading above its signal line for the last couple of weeks.
On April 9, 2020, the 8-day EMA showed bullish crossover on 13-day EMA for Nifty and since then that bullish setup is intact.
Positional Support for Nifty is seen at 8,900, and unless that is breached, the short-term trend of the market would be considered bullish only.
One should exit trading longs if Nifty closes below 8,900.
Bank Nifty has been trading in the symmetrical triangle on the hourly charts.
Any level above 20,225 in spot would push the index towards the target of 22,400 in the immediate short term.
Support for Bank Nifty is seen at 19,400, which should be utilised as a stop loss while trading long positions.
Positional support for Bank Nifty is seen at 18,700 odd levels.
Among the sectors, pharma, MNC and FMCG should continue to do well. So to conclude, Nifty is expected to remain bullish until it holds above 8,900. Any level above 9,390 would push Nifty towards the target of 9,600-9,650 followed by 9,970.
Here are three stock recommendations for the next 3-4 weeks:
Granules India | Buy | LTP: Rs 172.55 | Target price: Rs 198 | Stop loss: Rs 159 | Upside: 15%
The stock is forming inverse head and shoulder which is the continuation of a primary uptrend.
In January, the stock broke out from the double top resistance at Rs 143 on the monthly charts. Indicators and oscillators have been showing strength on the daily and weekly charts.
The pharma sector has been outperforming for the last couple of months and it is expected to continue its bullish momentum.
Dr Lal Path Lab | Buy | LTP: Rs 1,551 | Target price: Rs 1,768 | Stop loss: Rs 1,445 | Upside: 14%
This is one of the stocks which is trading above its 200-DMA. The stock has been outperforming significantly when the overall market is passing through a rough phase.
The short-term moving averages are trading above medium and long-term moving averages.
Navin Flourine | Buy | LTP: Rs 1,628.25 | Target price: Rs 1,790 | Stop loss: Rs 1,500 | Upside: 10%
The stock price has registered a new all-time high with higher volumes. The stock has been forming higher highs and higher lows.
The stock is trading above all important moving averages. Indicators and oscillators have been showing strength in the existing bullish trend.
Relative strength compared to CNX 500 index is very high for the stock.
(The author is Senior Technical and Derivative Analyst at HDFC securities)
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