Nifty reversed from its new 46-months low of 7,511 on the back of recovery across the globe and also due to short-covering ahead of F&O expiry.
On March 25, the Indian benchmark index witnessed sharp short-covering majorly due to an extremely oversold oscillator and hopes of an economic stimulus package to soften the blow from the lockdown.
After a very long time, the breadth of the market remained in the favour of bulls; for every loser, there were two gainers.
India VIX seems to have temporarily topped out. If it sustains below 70, we will start seeing huge premium decay in Nifty and Bank Nifty and that will confirm the short-term bottom for the market.
Banking Index formed a bullish engulfing candlestick on March 25 which was well-supported with extremely oversold oscillator RSI (14) on the daily timeframe.
This short-term bullish structure can help Bank Nifty to stretch its pullback towards 21,000-mark. One should avoid aggressive buying as most markets in the world are in a bear grip.
The current chart formation suggests if Nifty sustains above 8,000-mark for the next couple of weeks, it will surely create a short-term bottom for the benchmark index.
A break below the said will test 7,500 levels in no time. On the higher side, the index may continue to face hurdles around 8,800 - 9,000 levels.
Here are two stock recommendations for the next 3-4 weeks:
Pidilite Industries | Sell | LTP: Rs 1,256 | Target: Rs 1,100 | Stop loss: Rs 1,380 | Downside: 12%
Pidilite Industries has almost breached its 18-month long rising channel pattern and is currently trading below its support level on a weekly timeline.
Most indicators and oscillators are negatively poised and are looking weak enough to drift further.
The stock has drifted below its 50-day exponential moving average on the weekly timeframe which indicates bears are in full control to push price lower.
On the monthly timeframe, the counter has formed a bearish engulfing candlestick pattern.
Traders can short the stock in a range of Rs 1,265 - 1,275 for the target of Rs 1,100 with a stop loss above Rs 1,380 on a daily closing basis.
Avenue Supermarts | Buy | LTP: Rs 1,899.10 | Target: Rs 2,150 | Stop loss: Rs 1,750 | Upside: 13%
After a steep correction of almost 30 percent from an all-time high level, Avenue Supermarts (D-Mart) is trading near its horizontal trend line support of a weekly time frame.
The 50-day exponential moving average is acting as an anchor point for the stock on a weekly time scale.
The counter has been forming a base near Rs 1,750 for the last couple of days, which is supported by momentum oscillator RSI (14) which has rebounded from the oversold zone with a positive crossover on a daily interval.
Traders can accumulate the stock in a range of Rs 1,890-1,910 for the target of Rs 2,150 with a stop loss below Rs 1,750 on a daily closing basis.
(The author is Technical Analyst, Bonanza Portfolio)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.