Chartist Talks: These 3 stocks will likely head north in the coming week — Sudeep Shah, SBI Securities

Last week (Friday December 6), at 24,669, the benchmark Nifty index ended on a positive note for the third consecutive week after witnessing extreme volatility on Thursday. The formation of a sizeable bullish candle on the weekly chart, coupled with a close above its short and long-term moving averages, adds to the positive narrative. The daily RSI (Relative Strength Index) is also about to surge above the 60 mark. Further, the daily MACD (Moving Average Convergence Divergence) is bullish as it is above its zero line and signal line. The MACD histogram is also suggesting an uptick in momentum.

Hence, we feel the index is likely to continue its northward journey over the next couple of  sessions. Talking about levels, 24,850-24,900 will be a crucial hurdle for the index. Any sustainable move above 24,900 will lead to a sharp rally up to 25,200, followed by 25,500 in the short term. On the downside, the 100-day EMA (Exponential Moving Average) zone of 24,350-24,300 will act as immediate support for the index.

What is your trading strategy for the Sensex, which has rallied 5,500 points in the past three weeks?

The Sensex has found support near its 200-day EMA level and witnessed a sharp rally, surging over 6 percent in just 12 sessions. Along with this, the index has surged above its short and long-term moving averages. What's also noteworthy is that the daily RSI surged above the 60 mark for the first time after 44 trading sessions.

We believe the index is likely to continue to head north over the next couple of sessions, with the 82,300-82,400 zone acting as an immediate hurdle. Any sustainable move above 82,400 will lead to a sharp rally up to 83,200 in the short term. On the downside, 80,500-80,400 will act as crucial support for the index.

Do you see further upward movement in BSE and PB Fintech shares, which saw a  horizontal trendline breakout and rounding-bottom pattern breakout, respectively, last week?

Yes, we believe both stocks are likely to continue their northward journey over the next couple of sessions.

BSE shares have had an ascending triangle pattern breakout on a daily scale, along with robust volume. Per this pattern, the upside target is placed at Rs 6,000 for the medium-term, with support at Rs 5,100 levels.

PB Fintech has seen a stage-2 cup pattern breakout on a weekly scale, confirmed by robust volume. This places the upside target at Rs 2,390 for the short term, with support near Rs 2,030 levels.

Is it time to add exposure to Paytm?

Yes, the stock formed a bullish engulfing candlestick pattern on May 9, 2024, and thereafter started hitting higher highs and higher lows along with robust volume. It has surged 210 percent in just 144 trading sessions. We feel the stock is likely to continue its upward journey as long as it hits higher highs and lows. The momentum indicators and oscillators are also suggesting strong bullish momentum in the stock.

Talking about levels, the stock is likely to test Rs 1,060, followed by Rs 1,130 in the short term. On the downside, Rs 900-890 will act as immediate support.

Are the charts indicating a fresh upmove in the Nifty Midcap 100 and Smallcap 100 indices?

Nifty Midcap 100 and Smallcap 100 have been strongly outperforming the frontline indices for the last couple of trading sessions, and last week, both jumped over 4 percent. Notably, the smallcap index is now just a stone’s throw from its all-time high.

The benchmark Nifty index has surged over 6 percent in three weeks from its recent lows. During the same period, the Nifty midcap index has climbed 9.5 percent, and the smallcap index has jumped nearly 12 percent. This outperformance by the broader markets underscores their robust momentum. We maintain our view that the broader markets still have room for further upsides.

We feel the smallcap index is likely to test 19,600 levels, followed by 19,900 in the short term, while 19,200-19,150 will act as immediate support. The midcap index is likely to test 59,700 in the short term, while 57,900-57,800 will act as immediate support.

Q: What are your top two picks for next week?

My picks are:

Indian Railway Finance Corporation

IRFC touched a low of Rs 132.80 on October 25 and thereafter witnessed a pullback. During this rally, the stock surged above its short and long-term moving averages. Further, its daily RSI surged above the 60 mark for the first time since July 2024, and is on a rising trajectory, which is a bullish sign. We recommend accumulating the stock  at the Rs 159-157 level, with a stop-loss of Rs 152. On the upside, it is likely to test Rs 167, followed by Rs 175 in the short term.

EMS

The stock has seen a downward sloping trendline breakout on a daily scale, confirmed by robust volume. In addition, it has formed a sizeable bullish candle, which adds strength to the breakout. Momentum indicators and oscillators are also suggesting strong bullish momentum in the stock. Hence, we recommend accumulating the stock  at Rs 895-890, with a stop-loss of Rs 860. On the upside, it is likely to test Rs 940, followed by Rs 960 in the short term.

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