Nandish Shah, Senior Derivative & Technical Analyst at HDFC Securities
Nifty50 surged 272 points or 1.6 percent on the first day of the New Year to close at 17,626 levels on January 3. The intermediate trend turned bullish as the Nifty broke out from the downward sloping trendline, adjoining the highs of October 19 and November 15. The Nifty last week surpassed the crucial resistances of 50 and 100-day EMA (exponential moving average) which gives further evidence of an uptrend. Short-term indicators and oscillators like DMI (directional movement index), RSI (relative strength index) and MFI (money flow index) have been showing strength in the Nifty uptrend.
In the Index Futures segment, FIIs have been creating fresh longs, where their net long to short ratio is above two. In other words, out of their total positions in the Index Futures, 70 percent is on the long side, while 30 percent is on the short side.
In the Option segment, we have seen aggressive Put writing at 17,200-17,300 levels. This level also coincides with the 20-day EMA which is placed at 17,237-odd levels. Therefore, we believe that the short-term trend will remain bullish till the Nifty is trading above 17,200.
Next upside targets for the Nifty is seen around 17,805, followed by 18,000 levels. Longs should be protected with trailing stop-loss of 17,200 in the Nifty.
Here are three buy calls for the next 2-3 weeks:
Ramco Industries: Buy | LTP: Rs 268.30 | Stop-Loss: Rs 253 | Target: Rs 295 | Return: 10 percent
The stock price has broken out on the daily chart with higher volumes where it closed at highest level since November 17. Short-term trend of the stock is positive where it is trading above its all-important short-term moving averages.
Daily RSI and MFI has shown trend line breakout, which is a bullish development for the short term. Plus, DI (directional indicator) is placed above the Minus DI, while the ADX (average directional index) line has started sloping upwards, indicating that the stock is likely to gather momentum in the coming days.
Suprajit Engineering: Buy | LTP: Rs 454.05 | Stop-Loss: Rs 430 | Target: Rs 490 | Return: 8 percent
The stock price has broken out from the downward slopping trendline, adjoining the highs of November 16 and December 29. Primary trend of the stock remains positive as it is trading above its 100 and 200-day EMA.
Oscillators like RSI and MFI are showing strength in the stock. Plus, DI is placed above the Minus DI while ADX line has started sloping upwards, indicating stock is likely to gather momentum in the coming days.
Ingersoll Rand: Buy | LTP: Rs 1,240.65 | Stop-Loss: Rs 1,150 | Target: Rs 1,400 | Return: 13 percent
The stock price has broken out from the downward slopping trendline, adjoining the highs of November 17 and December 8. The stock price is forming bullish higher top higher bottom formation on the weekly charts.
The primary trend of the stock remains positive as it trades above its important moving averages. Oscillators like RSI and MFI is placed above 60 and rising upwards indicating strength in the current uptrend.
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