Vidnyan Sawant, AVP - Technical Research at GEPL Capital
On the weekly chart, it appears that Nifty has found support at the 61.8 percent Fibonacci retracement level, based on the prior upward move from 16,747 (September 2022) to 18,887 (November 2022). This is also in line with the descending trend line, which shows the change in the polarity.
Nifty on weekly charts has formed an Inside Bar candle which indicates a decrease in the volatility of the prices.
The index is moving near its 20-week SMA (simple moving average) for the last couple of weeks, demonstrating indecisiveness in the prices.
The momentum indicator RSI (relative strength index) placed near the 50 levels confirms the lack of momentum for the short to medium term.
The Nifty has immediate resistance placed at 18,000 (psychological level) followed by 18,265 (key resistance) levels. The downside support for the index is placed at 17,652 (week low) followed by 17,353 (key support).
Based on the overall trend and indications from indicators, it is expected that the Nifty will remain rangebound between 17,652 – 18,265 for the short to medium term.
Here are three buy calls for next 2-3 weeks:
Atul Auto: Buy | LTP: Rs 371 | Stop-Loss: Rs 330 | Target: Rs 440 | Return: 18 percent
Atul Auto is trading at an all-time high, which demonstrates the strong upward momentum of the stock. After testing the neckline of a Rounding Bottom pattern, the stock experienced an upward bounce. The breakout occurred on October 10, 2022.
The breakout is confirmed, accompanied by higher volumes and a Gap, which can be considered as a breakaway Gap. The prices are continuously hovering near the upper Bollinger band on the daily charts which point towards the rising volatility of the prices.
The ratio charts against Nifty Auto have shown a multi-year breakout which illustrates the outperformance of the stock.
Going ahead we expect the prices to move higher till the level of Rs 440 where the stop-loss must be Rs 330 on the closing basis.
Action Construction Equipment: Buy | LTP: Rs 383 | Stop-Loss: Rs 350 | Target: Rs 440 | Return: 15 percent
The trend in ACE prices is becoming more pronounced as evidenced by the increasing slope of the trend line. This suggests a rapid acceleration in prices.
After evaluating the neckline of a Rounding Bottom formation, the stock saw a rebound in its upward trend. The breakout happened in the last week of August 2022.
Prices have sustained well above the 20-week SMA. The average has acted as a strong variable support for the prices and is now acting as a proxy for the trend line.
RSI on the weekly timeframe has shown a bullish reversal which reflects the rising momentum in the prices.
Going ahead we expect the prices to move Higher to the level of Rs 440 where the stop-loss must be Rs 350 on the closing basis.
KPIT Technologies: Buy | LTP: Rs 817 | Stop-Loss: Rs 770 | Target: Rs 960 | Return: 17 percent
KPIT Technologies has maintained its formation of higher highs and higher lows which shows the positive undertone of the prices.
The stock now has witnessed a breakout from the Cup & Handle pattern at its life high which indicates the beginning of an upward trend.
The breakout is confirmed as it was accompanied by higher volumes.
The weekly relative strength index (RSI) on daily as well as weekly timeframe is above the 60 mark reflecting strong momentum in prices.
Going ahead we expect the prices to go higher till Rs 960 level where the stop-loss must be Rs 770 on the closing basis.
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