Despite the narrow-base trading range on January 15, we have witnessed strong market breadth with a gradual increase in the advance-decline ratio on a daily closing basis.
The last hour recovery helped the Indian indices to close near the day's high. However, the market broke the four consecutive days' winning streak and ended with a moderate loss.
Benchmark index Nifty witnessed sharp V-shape reversal rally since global tension started to fizzle out.
The index has successfully negated its bearish pattern set up on the daily time frame and reclaimed its all-time high level in January 15's trading session.
Whenever we find the failure of a bearish pattern, a strong positive surge is expected in the coming sessions.
Nifty Midcap100 index continues to be a special attraction that has registered 6 straight days' positive closing. The index is currently outperforming the benchmark index in all time frames and is further expected to outperform in the near future also.
Auto and metal index will continue to be in the limelight and both the indices have given bullish breakout on higher time frames.
Nifty is sustaining above its 20, 50 and 100-days simple moving average on the daily time frame. Daily RSI (14) is reading near 60 levels with a positive crossover which is positive for the near future.
However, looking at the recent movement, volatility will be at its peak as Nifty is trading in uncharted territory, so trading with proper stop loss is advisable.
Drift below 12,100 may see a further correction or an extended selling till 11,900 in the coming trading session.
Going forward, any uptick in Nifty can get capped near its next resistance zone of 12,514-12,600 which is supported by Fibonacci ratio.
Here are three buy calls for the next 3-4 weeks:
HeidelbergCement India | Buy | LTP: Rs 194.55 | Target: Rs 222 | Stop loss: Rs 185 | Upside: 14.11%
After prolonged consolidation, the stock has given a breakout of its “Downward Slanting Trendline” on the weekly time frame.
After witnessing a breakout above “Horizontal Trendline”, the stock was in consolidation mode for the last few months.
A current spurt in prices has witnessed a follow-up buying in the stock.
A strong reversal in Momentum oscillator RSI (14) from 40 levels has set up a strong base for the stock and is currently reading above 55 levels with positive crossover on the weekly horizon.
Monthly RSI (14) is in a “Bullish Range Shift” for the last couple of years and is reading above its upward rising trendline.
Traders can accumulate the stock in the range of Rs 194 -196.
National Aluminium Company (Nalco) | Buy | LTP: Rs 48.25 | Target price: Rs 54.70 | Stop loss: Rs 44.50 | Upside: 13.37%
Since the last couple of months, prices are stuck in a narrow range of Rs 40 to Rs 46 levels. A sudden spurt in prices has witnessed a breakout of a “Symmetrical Triangle Pattern” on the weekly chart.
Momentum Oscillator RSI (14) is certainly indicating strong momentum with a higher high and higher low formation on the weekly chart.
Overall, the metal index is showing a strong positive trend since the last couple of months and Nalco was laggard in the metal pack and seems to have bottomed out.
Traders can accumulate the stock in a range of Rs 47.80 – 48.70.
Bajaj Auto | Buy | LTP: Rs 3,126.50 | Target: Rs 3,325 | Stop loss: Rs 2,998 | Upside: 6.34%
Prices have formed a Bullish Hammer candlestick pattern in the previous week which indicates strong base support.
The stock has retested its trendline support and shown a strong reversal in prices.
The stock is trading above its 50 and 100-week exponential moving average, which is positive for the stock in the short to medium-term.
Traders can accumulate the stock in the range of Rs 3,118 - 3,135.
(The author is a technical analyst at Bonanza Portfolio)Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.