In short term, the Nifty 50 has formed a 'dark cloud cover' pattern in the daily chart on January 30, indicating a potential reversal. This abrupt shift from a bullish sentiment to a bearish reversal signifies potential weakening of the prevailing uptrend. The Nifty concluded Tuesday's trading session near the 20 DMA at 21,520 levels, down 1 percent. While the 50 DMA is positioned at 21,200 levels as the next important support.
The India VIX, the fear gauge, has experienced a significant surge and surpassed the 16 level. The last time India VIX closed above this threshold was in March 2023. This rise in the fear gauge suggests intensified market volatility.
In summary, a break below the 20,500 level could lead to a downward movement in the Nifty, while surpassing the 22,124 level might signal the onset of the next rally targeting 22,750 and 23,000.
Bank Nifty concluded at 45,368, marking a modest decline of 0.16 percent. Notably, Bank Nifty encountered robust resistance at 45,650-45,700 levels, leading to corrections in the preceding two sessions.
The 200-day moving average (DMA) at 44,500 acts as a critical support with a breach below this level that could intensify selling in the index.
In a broader context, following a correction of nearly 7 percent from its all-time high of 48,636.45, the Bank Nifty faces a crucial juncture. A further decline below the important level of 43,700, representing a nearly 10 percent correction, could signal the potential extended correction. On the other hand, if this level is defended, the path seems open for a gradual and steady ascent towards its previous peak levels.
Here are three buy calls for short term
Dr Lal PathLabs: Buy | LTP: Rs 2,476 | Stop-Loss: Rs 2,380 | Target: Rs 2,610 | Return: 5.4 percent
The stock is currently trading above its 20 simple moving average (SMA), reinforcing a robust support level in price action. Exiting the accumulation zone, the stock exhibits positive signal and is trading above the middle Bollinger band with a positive MACD (moving average convergence divergence) indicator crossover. These indicators suggest a bullish momentum highlighting the stock's strength.
Although minor resistance exists around Rs 2,500 levels, once crossed, strong traction is expected on the higher side.
Hence, based on the above technical structure, one can initiate a long position at CMP Rs 2,476.2 for a target price of Rs 2,610. The stop-loss can be kept at Rs 2,380.
Bharat Dynamics: Buy | LTP: Rs 1,702 | Stop-Loss: Rs 1,625 | Target: Rs 1,840 | Return: 8 percent
In the daily chart, the stock is actively shaping a compelling bottom double pattern showcasing a potential reversal. Its resilience is evident through consistent trading above the 20-day moving average.
The RSI (relative strength index) of 57 emphasize a favourable bullish momentum, reinforcing the stock's strength. Notably, a noteworthy breakthrough occurred as the stock closed above the crucial 1,700 resistance levels indicating heightened buying interest especially among short-term traders.
Hence, based on the above technical structure, one can initiate a long position at CMP of Rs 1,702.3 for a target price of Rs 1,840. The stop-loss can be kept at Rs 1,625.
DLF: Buy | LTP: Rs 786.90 | Stop-Loss: Rs 755 | Target: Rs 840 | Return: 7 percent
The stock is demonstrating a bullish trend, consistently forming higher highs and higher lows. It sustains a positive momentum by trading above both the 20-day and 50-day exponential moving averages (EMA).
Significantly, it maintains a robust support level at 23.6 percent Fibonacci retracement and remains above a sturdy support zone of Rs 770 levels. The noteworthy increase in delivery volume by 23 percent over the past month adds to the positive indicator as well.
Hence, based on the above technical structure, one can initiate a long position at CMP Rs 786.9 for the target price of Rs 840. The stop-loss can be kept at Rs 755.
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