The Nifty continued its upward journey for the second day in a row on the back of strong Asian markets. The index closed with gains of 0.61 percent or 111 points at 18,314 on May 22.
The benchmark index formed a bullish hammer pattern with follow-up gains on Monday, which suggest that running correction in overall uptrend is over. Primary and intermediate trend of the Nifty remains positive as it trades above its important moving averages.
Momentum Oscillators like RSI (relative strength index 11) and MFI (money flow index 10) on the weekly chart suggest strength in the current bullish trend. Therefore, we believe that this uptrend in the Nifty is likely to continue for the coming weeks.
The Nifty last week formed a swing low of 18,060, which coincides with the recent swing lows of May 3 (18,042) and May 5 (18,055).
In the derivative side, we have seen aggressive Put writing at 18,000-18,120 levels. Moreover 20-day EMA (exponential moving average) is placed at 18,114 levels. Therefore, on the downside, 18,000-18,100 could now be considered as an immediate support for the Nifty.
On the upside, a swing high of 18,459 of May 15 could act as an immediate resistance for the Nifty. Above 18,459, the Nifty could move towards the next resistance level of 18,600 and 18,888. Traders are advised to hold longs with trailing stop-loss of 18,000 in the Nifty on the closing basis.
The upside momentum continued in broader market indices like smallcaps and midcaps with both the indices rising for eight consecutive weeks. Considering the positive momentum currently being seen in the markets, midcap and smallcap stocks could continue their outperformance for the coming weeks.
Here are three buy calls for the next 3-4 weeks:
MSTC: Buy | LTP: Rs 318.50 | Stop-Loss: Rs 295 | Target: Rs 345-360 | Return: 13 percent
The stock price has broken out on the daily chart from the downward sloping trendline, adjoining the highs of November 30, 2022 and February 1, 2023. Primary and intermediate trend turned positive as the stock price has closed above its 50, 100 and 200-day EMA.
Momentum Oscillators RSI (11) and MFI(10) are upward-bound and placed above 60 on the weekly chart, indicating strength in the stock.
Godrej Industries: Buy | LTP: Rs 475 | Stop-Loss: Rs 450 | Target: Rs 510-525 | Return: 11 percent
The stock price has broken out on the weekly chart from the downward sloping trendline, adjoining the highs of January 7, 2022 and December 16, 2022. Stock price has formed multiple bottoms around Rs 400 levels on the daily chart.
Primary trend of the stock turned positive as stock price has crossed its 200-day EMA. Plus DI (directional indicator) is trading above minus DI while ADX (average directional index) line is placed above 25, indicating stock price is likely to gather momentum in the coming days.
IDBI Bank: Buy | LTP: Rs 55.10 | Stop-Loss: Rs 52 | Target: Rs 59-61 | Return: 11 percent
The stock price has been forming higher top higher bottom candlestick pattern on the weekly chart since July 2022. Momentum Indicators and oscillators are showing strength in the stock.
After breaking out from the downward sloping trendline on the daily chart on May 17 with higher volumes, the stock price is moving sideways which we believe is a buying opportunity.
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