During the last week, the Nifty50 managed to close above the crucial resistances of its 20 weeks EMA (exponential moving average), first time after the week ending April 13, 2022, at 16,243.
From the recent bottom of 15,183 - a low made on June 17 - the Nifty has registered a rise of 1,569 points towards 16,752. During this rally, the index has managed to surpass the crucial resistance of its 200 days EMA. Nifty is placed above its 20, 50, 100 and 200 days EMA, which indicates a bullish trend on all timeframes.
The weekly RSI (relative strength index) for the Nifty has reached above 50 and its signal line, which indicates the strength in the positional uptrend. Daily ADX (average directional index) has turned north but still placed at 16, much below the extreme momentum levels. With rising ADX and +DI placed above –DI on the daily chart, we can expect the benchmark to extend the gains from the current levels.
In the Index Futures segment, FIIs covered their shorts during the last week, where their net long-to-short ratio has moved up to the 0.83 level from 0.17 levels, highest since June 1, which augurs well for the markets in the coming weeks. In the Options segment, the Nifty open interest Put Call ratio has risen sharply on the back of aggressive Put writing at 16,300-16,500. This level also coincides with the 20 weeks EMA which is placed at 16,243. Therefore, our advice is to remain bullish for the Nifty.
However, as the Nifty has reached near the previous swing high resistance of 16,800, we should not rule out the possibility of minor correction towards the immediate support levels of 16,500.
Above 16,800, Nifty could move towards 16,994 and 17,422 levels. Long should be protected with the stop-loss of 16,300 in Nifty50.
Here are three buy calls for the next 3-4 weeks:
Brigade Enterprises: Buy | LTP: Rs 488 | Stop-Loss: Rs 465 | Target: Rs 515-550 | Return: 13 percent
The stock price has broken out on the daily chart where it closed at three months high. Primary and intermediate trend of the stock is positive as it is trading above its all-important moving averages.
RSI oscillators is in rising mode and placed above 60, indicating strength in the current uptrend. Plus DI is trading above Minus DI while ADX line is placed above 25, indicating stock is likely to gather momentum in the coming days.
Suprajit Engineering: Buy | LTP: Rs 358 | Stop-Loss: Rs 340 | Target: Rs 380-400 | Return: 12 percent
The stock price has broken out from the symmetrical triangle on the weekly chart. Short and medium term trend of the stock is positive as it is trading above its important moving averages.
Momentum Oscillators – RSI (11) and MFI (money flow index - 10) have placed above 60 and sloping upwards, indicating strength in the current uptrend of the stock. Plus DI is trading above Minus DI while ADX line has crossed 25 levels, indicating momentum in the current uptrend.
Action Construction Equipment: Buy | LTP: Rs 232 | Stop-Loss: Rs 220 | Target: Rs 245-260 | Return: 12 percent
The stock price has broken out on the daily chart where it closed at highest level since May 2, 2022. The stock price has broken out from the downward sloping trendline, adjoining the highs of April 22 and July 7, 2022.
Trend of the stock is positive as it is trading above its important moving averages. Plus DI is trading above Minus DI while ADX line is placed above 25, indicating stock is likely to gather momentum in the coming days.
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