It was an action-packed day on July 29 as the benchmark index Nifty and the banking index swung both ways, keeping intraday traders on the edge.
Nifty failed its previous session’s breakout and formed a bearish harami candlestick pattern on the daily chart.
Generally, such a candlestick pattern requires confirmation of the red candle, closing below the bearish pattern.
Nifty has reached close to the resistance of 78.6 percent retracement of the entire downswing seen from January 2020 top to March 2020 bottom.
On the lower side, a breach of 10,900 level which is 21-day EMA, will test the lower band of the channel, which is placed at 10,750.
On the higher side, the upside is likely to be capped near 10,600 which is the upper band of the rising channel pattern.
Midcap100 index closed above its 50-week exponential moving average on the weekly interval but still, it is underperforming the benchmark index which is visible on the Relative Strength (RS) indicator on the weekly chart.
Nifty has neglected its bearish ABCD harmonic pattern which was placed at 10,971 level on the weekly chart.
For the Bank Nifty, momentum oscillators are gradually rising higher on the weekly interval but still, the banking index is underperforming the benchmark index Nifty which is visible on the Relative Strength (RS) indicator on the weekly chart.
Here are three buy calls for the next 2-3 weeks:
Sonata Software | Buy | LTP: Rs 258.70 | Target price: Rs 295 | Stop loss: Rs 240 | Upside: 14%
Sonata Software has completed a consolation pattern and witnessed a breakout above its trendline resistance on July 29th on the daily timeframe.
At the current juncture, the stock has given a fresh breakout above its 100-days exponential moving average on the daily interval along with marginally higher volumes.
The majority of indicators and oscillators are showing a positive trend for the current scenario.
Furthermore, prices have sustained above all its major simple moving averages.
Traders can accumulate the stock in the range of Rs 257-261 for the target of Rs 295 with a stop loss below Rs 240 on a daily closing basis.
Tata Steel | Buy | LTP: Rs 372.85 | Target price: Rs 410 | Stop loss: Rs 350 | Upside: 10%
On July 20th, the stock managed to surpass the multiple resistance zones around Rs 340 – 350, which eventually confirmed a smaller degree triangle breakout.
After that, the stock consolidated and completed its throwback near its trendline support.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
The stock is trading above its exponential moving averages (21 and 50) on the daily chart. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover.
The MACD indicator is reading above its line of polarity with positive sentiments.
Traders can accumulate the stock in the range of Rs 370 - 375 for the target of Rs 410 with a stop loss below Rs 350 on a daily closing basis.
ICICI Prudential Life Insurance Company | Buy | LTP: Rs 451 | Target price: Rs 490 | Stop loss: Rs 425 | Upside: 9%
Since March 2020, the stock has been trading in a higher high higher low formation. It confirmed a horizontal trendline breakout on the daily timeline.
Volumes have been rising along with the prices. The counter is trading near its four-month high level.
The short and medium-term trend of the stock is positive as it is trading above (21, 50 and 100- day) exponential moving averages on the daily interval.
Oscillators and momentum indicators like RSI and MACD are showing strength in the stock.
Traders can accumulate the stock in the range of Rs 447-451 for the target of Rs 490 with a stop loss below Rs 425 on a daily closing basis.
(The author is a technical analyst at Bonanza Portfolio)
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