On May 7, Nifty 50 continued its downward trend, ending lower by 0.62 percent at 22,302.50. At the moment, bulls and bears are still fighting it out as the index is neither very bullish nor very bearish.
The India VIX, or fear gauge, has risen from 10 to 17 in just 9 trading sessions, any drop in volatility can lead to short covering. The weekly chart displays 22,220 as an important level. Below this, index could move towards 22,000. While 22,600 levels are important resistance, relative strength index (RSI) could remain weaker unless these levels are crossed.
Nifty has breached that 20-DMA and selling commenced. Divergence in daily RSI (relative strength index) indicates the bullish trend is slowing down, but the primary trend has not changed yet.
The market may be volatile between 22,000 and 22,550, so it's best to avoid catching short-term tops and bottoms.
Bank Nifty
For the fifth consecutive day, the Bank Nifty declined and ended the session with a loss of 1.25 percent, closing at 48,285.35. Apart from underperformance by private banks, the Nifty PSU Bank index has fallen nearly 5.89 percent in just two trading sessions, potentially slowing the Bank Nifty’s momentum.
The index has recently dropped below a significant support level at 48,342, signalling a potential downtrend. If the 40 DMA, currently around 47,750, is breached, the index may slide further towards 47,300. The bullish trend would resume once the index crosses 49,200.
Here are three buy calls for short term:
Avenue Supermarts: Buy | LTP: Rs 4,660 | Stop-Loss: Rs 4,450 | Target: Rs 5,000 | Return: 7 percent
The D-Mart stock is forming higher highs and higher lows indicating a sustained uptrend. It is placed well above its short-term (20-day) and medium-term (50-day) moving averages suggesting bulls are in total control.
The RSI comfortably holding 58 levels is gradually inching higher indicating strength in the stock. Double bottom pattern formation in the daily chart confirms formation of a bullish setup.
Hence, based on the above technical structure, one can initiate a long position at CMP Rs 4,660 for a target price of Rs 5,000. The stop-loss can be kept at Rs 4,450.
Bharti Airtel: Buy | LTP: Rs 1,286 | Stop-Loss: Rs 1,240 | Target: Rs 1,370 | Return: 6.5 percent
Bharti Airtel has formed a strong base after a decent correction. In the last two trading sessions, the stock is consolidating near its support level.
The stock is holding above the 20-day SMA. The Bollinger bands have contracted hinting at reduced volatility and a potential breakout above Rs 1,298 could further intensify the buying interest.
Based on the above technical structure, one can initiate a long position at CMP Rs 1286 for a target price of Rs 1,370. The stop-loss can be kept at Rs 1,240.
Nestle India: Buy | LTP: Rs 2,509 | Stop-Loss: Rs 2,430 | Target: Rs 2,670 | Return: 6.4 percent
Nestle India stock has undergone a consolidation phase for several weeks. Still, it is now displaying renewed momentum establishing a strong base in a larger time frame and trading above 20 DMA, indicating strength in the stock.
The positive crossover is indicated in the MACD (moving average convergence divergence) daily chart, while the RSI stands at 50 levels. The price is sustaining above Rs 2,500 levels with a decent volumes, pointing out buying interest among the short-term traders.
Basis above technical set up, one can initiate a long position at CMP Rs 2,508 for a target price of Rs 2,670. The stop-loss can be kept at Rs 2,430.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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