Vinay Rajani, Senior Technical & Derivative Analyst at HDFC Securities
Nifty has been consolidating in the narrow range of 350 points between 16,440 and 16,794 for last 6 trading sessions till June 6. During this period, Nifty took support around 16,440 for three times. Previous swing highs on the daily chart has also been projecting strong support at 16,400 in Nifty.
Nifty has partially filled the gap, which was formed on May 30 between 16,370 and 16,506. However, on the upside 200 days exponential moving average (EMA), placed at 16,745, is expected to provide strong resistance in the days to come. Nifty has also been holding higher tops and higher bottoms on the daily chart, which indicates continuation of an uptrend. Bullish setup for Nifty would be violated below 16,400 level.
Considering the technical evidences discussed above, we feel that market trend would remain choppy in the short term. For fresh breakout, Nifty has to surpass the hurdle of 16,800 on closing basis. Existing long positions can be held with the stop-loss of 16,400. Below 16,400, Nifty could slide towards next support of 16,000.
From the sectors Fertilizers, Metals and IT are showing sign of bullish trend reversal on the short-term charts. Healthcare and Pharma indices are looking weak on charts. Banks and financials are expected to underperform.
Here are three buy calls for next 2-3 weeks:
ABB India: Buy | LTP: Rs 2,363 | Stop-Loss: Rs 2,244 | Targets: Rs 2,528-2,750 | Return: 7-16 percent
After giving breakout from downward sloping trend line, the stock witnessed throwback rally towards breakout level, found support and bounced back, with higher tops and higher bottoms on daily charts. Stock price broke out from last three weeks' narrow consolidation.
Volumes have been rising along with the price rise. Stock is placed above all important moving averages, indicating bullish trend all time frame.
Capital Goods sector has started outperforming. Indicators and oscillators have turned bullish on daily and weekly charts.
KNR Constructions: Buy | LTP: Rs 256.25 | Stop-Loss: Rs 245 | Targets: Rs 276-295 | Return: 8-15 percent
After witnessing running correction in previous four trading sessions, stock found support on its 20 days EMA and turned north with jump in volumes.
Daily relative strength index (RSI) has reached above 60, which indicates the high chances of uptrend sustaining for the coming days. Construction companies have started showing strength after long time.
Rashtriya Chemicals and Fertilisers: Buy | LTP: Rs 97 | Stop-Loss: Rs 92 | Targets: Rs 105-115 | Return: 8-18 percent
The stock has formed Bullish Engulfing candlestick pattern on the daily charts. Stock found support on the upward sloping trend line on the daily chart and reversed north.
Stock rose more than 4 percent with rising volumes on June 6, 2022. Indicators and oscillators have been showing strength. Fertilizers stocks have again started outperforming.
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