Vidnyan Sawant, AVP - Technical Research at GEPL Capital
On a weekly timeframe, the Nifty index has formed an Inside Bar candlestick pattern which illustrates decrease in the volatility of the prices.
The current position of the index is at the 50 percent retracement level of the prior upward movement from 15,183 in June 2022 to 18,887 in December 2022. This indicates that the index is experiencing a bearish trend.
The prices have sustained below the 20-week SMA confirming a bearish undertone of the prices. Momentum indicator RSI (relative strength index) on the Weekly timeframe is falling and has sustained well below the 50 mark reflecting lack of positive momentum in the prices.
The resistance for the index is placed at the level of 17,250 (key resistance) and 17,530 (3-week high). The downside support for the index is placed at 16,828 (prior weekly low) below that 16,747 (swing low). We feel that the index may maintain a range of 16,747 – 17,530 levels.
Here are three buy calls for next 2-3 weeks:
JK Lakshmi Cement: Buy | LTP: Rs 768.50 | Stop-Loss: Rs 710 | Target: Rs 880 | Return: 15 percent
The ratio charts of JK Lakshmi Cement against the benchmark Index Nifty are rising which illustrates the clear outperformance of the stock.
The recent up move in the prices was supported around the neckline of the rounding bottom pattern which the stock gave a breakout in late November 2022.
Furthermore, the prices have sustained well above 20-day SMA (simple moving average) confirming the beginning of the trend to the upside.
On the weekly timeframe, the relative strength index (RSI) has shown a breakout which reflects the presence of positive momentum.
Moving forward, we expect prices to rise to the level of Rs 880 with a recommended stop-loss of Rs 710 on a closing basis.
Shivalik Bimetal Controls: Buy | LTP: Rs 531 | Stop-Loss: Rs 515 | Target: Rs 600 | Return: 13 percent
SBCL has demonstrated a notable uptrend in its stock price since its listing on July 21, 2021. Despite experiencing a correction from April 18, 2022, the prices did not break supports and underwent a polarity change around Rs 370 level. This observation underscores the resilient nature of the stock's price movement during the correction phase.
The stock has already shown a breakout of the Descending triangle pattern which indicated the continuation of the prior uptrend.
The prices have sustained well above their key moving averages of 50, 100 & 200-day EMA (exponential moving average) which confirms the presence of a prior uptrend.
RSI on the Weekly as well as on the Daily timeframe is above the 50 mark reflecting the presence of strong momentum.
Going ahead we expect the prices to move higher till the level of Rs 600 where the stop-loss must be Rs 515 on the closing basis.
Action Construction Equipment: Buy | LTP: Rs 394.90 | Stop-Loss: Rs 370 | Target: Rs 440 | Return: 11 percent
The stock price of ACE is currently trading near its life-high which tells that the stock already is in strong momentum. It has started to climb post retesting the neckline of the rounding bottom pattern which prices gave a breakout in late October 2022.
On the daily timeframe, the stock has been consistently trading near the upper Bollinger Band, indicating increased volatility.
Additionally, the RSI on the weekly timeframe is rising and has sustained well above the 50 mark reflecting presence of strong momentum.
In conclusion, based on these technical indicators, it is anticipated that the stock will continue to rise towards Rs 440 level with a suggested stop-loss at Rs 370 on a closing basis.
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