By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
The domestic markets remained highly volatile even though the week was shortened due to couple of trading holidays. Domestic markets were still under pressure, especially because of poor numbers from a few major players. The Nifty index had a high near 21,750 before closing near 21,200 with a decent loss for the second consecutive week.
During past sessions, the benchmark index Nifty found support at 21,150, which then led to a massive rise from there. Interestingly, the index has reversed from the support of a bullish Wolfe Wave formation. Based on the pattern, the index may revisit the 21,700–21,800 zone in the upcoming week if the recent low near 21,150 is not broken. In the worst-case scenario, we anticipate that the index will take support below 21,150, close to the 20,900 zone, where multiple supports are placed and the AB=CD pattern is completed.
The 200 DEMA (day exponential moving average 44,570) of the Nifty Bank index has been retested, and we anticipate that this zone will serve as support in the upcoming sessions. Overall, we anticipate a strong rebound in the Nifty Bank index during the February 2024 derivative series if the 45,000–44,000 support holds.
Here are three buy calls for short term:
HDFC Bank: Buy | LTP: Rs 1,435 | Stop-Loss: Rs 1,380 | Target: Rs 1,550 | Return: 8 percent
Since the last 2 years or so, the said counter has been rejected six times from Rs 1,725–1,750 zone and is currently placed near Rs 1,430 mark. Currently, HDFC Bank has taken timely support near the October 2022 low of around Rs 1,380. Coincidentally, it is 200 DEMA, thus making it a viable buy at the current juncture.
The fall from January 17, 2024, to January 23, 2024, has witnessed decreasing volume (refer to the chart), which hints that bears are losing steam. On January 24, 2024, HDFC Bank made a classic Bullish Piercing candlestick pattern accompanied by decent volume, which cannot be ignored as of now.
Also, in the hourly time frame, it has managed to generate Bull divergence on stochastic. Based on the technical setup, one can accumulate the said counter in the range of Rs 1,420–1,450 with a stop-loss of Rs 1,380 and a target of Rs 1,550.
Rain Industries: Buy | LTP: Rs 175.60 | Stop-Loss: Rs 155 | Target: Rs 210 | Return: 20 percent
Since the last 2 months or so, the said counter has been consolidating between Rs 145 and Rs 155. Recently, it has given a breakout from the said range on a weekly closing basis, which is looking lucrative. Having said that, it has also formed a bullish GARTLEY pattern, which is 1.38 years old, thus making it more reliable.
Also, it has violated a couple of trendlines. The best part about this bullish reversal is that every bottom has bought with huge volume bars, which indicates bullish bias in the counter.
On the indicator front, the weekly RSI (relative strength index) has given a trendline violation, which further affirms our bullish stance on the counter. Thus, we advised traders and investors to go long in the range of Rs 170-176 with an upside target of Rs 210, and the stop-loss would be placed at Rs 155 on a daily close basis.
Note: The Gartley pattern is a Harmonic chart pattern, based on Fibonacci numbers and ratios, which help traders, identify reaction highs and lows.
Greaves Cotton: Buy | LTP: Rs 165 | Stop-Loss: Rs 143 | Target: Rs 200 | Return: 21 percent
The entire 2023 year went by, consolidating around 100–200 DEMA (exponential moving average), followed by recent bear trendline violations (refer to the chart). Also, volume is picking up from lower levels, thus making it attractive at current levels.
On the indicator front, the weekly MACD (moving average convergence divergence) has given a bull cross just near the zero line, which further affirms our bullish stance. Thus, one can buy in the zone of Rs 163–166 with a target of Rs 200 and a stop-loss of Rs 143 on a daily basis.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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