Vishal Wagh, Research Head at Bonanza Portfolio
Nifty opened gap up and closed flat in green near the resistance level of 17,500 amidst global sentiment and sideways market on October 19. On the daily chart, Nifty50 has seen formation of Spinning Top pattern on the daily timeframe whereas on the hourly timeframe, Nifty was in the range of 17,300 and 17,500.
It would be interesting to see how Nifty performs in the coming days as currently market is indecisive.
The momentum oscillator RSI (relative strength index - 14) on the daily chart is at around 55; whereas the MACD (moving average convergence divergence) is moving towards centre point from below. India VIX has increased from 17.45 to 17.48 levels around its 200 EMA (exponential moving average). Maximum pain for Nifty is at 17,500.
Important support levels for Nifty are at around 17,400, 17,300, and 17,200 whereas the resistance levels are at 17,500, 17,600 and 17,750.
As per the F&O data, short unwinding has substantially increased in out of the money (OTM) Calls, whereas long build-up was seen in, out of the money (OTM) Puts which indicates a positive market. 17,500 and 17,800 have high short built-up whereas 17,400 and 17,000 have high long build-up.
Here are two buy calls for next 2-3 weeks:
Kirloskar Ferrous Industries: Buy | LTP: Rs 277 | Stop-Loss: Rs 265 | Target: Rs 300 | Return: 8.3 percent
The stock has seen breakout of a parallel channel pattern after 13 months on the daily timeframe whereas on the weekly timeframe the stock has made a double bottom pattern which can be used as a confluence towards the bullish view.
The 200 EMA is at around Rs 233 and the stock is comfortably trading above it which is a positive sign. The momentum oscillator RSI (14) is at around 65 showing strength by sustaining above 50.
Technical indicator ichimoku cloud suggests a bullish move as the price is trading above the cloud. Observations of the above factors indicate that a bullish move is possible in Kirloskar Ferrous for targets upto Rs 300.
One can initiate buy on dip in the range of Rs 275-279 with stop-loss below Rs 265 on daily closing basis.
Elgi Equipments: Buy | LTP: Rs 450.3 | Stop-Loss: Rs 425 | Target: Rs 475 | Return: 5.5 percent
Elgi Equipments has broken the line of polarity by using its previous resistance zone as support on the daily timeframe. The stock has also made a double bottom pattern at the line of polarity which can be used as a confluence towards the bullish view.
The 200 EMA is at Rs 377 and the stock is comfortably sustaining above it which is a positive sign. Momentum oscillator RSI (14) is at around 53 on the daily time frame indicating strength by sustaining above 50.
According to the ichimoku indicator on the weekly timeframe, the price has seen to be taking support near the base line which is a positive point for the counter.
Observation of the above factors indicates that a bullish move in Elgi is possible for targets upto Rs 475.
One can initiate a buy trade in between the range of Rs 446-450 with stop-loss of Rs 425 on daily closing basis.
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