The Nifty has slipped below its 200-DMA (day moving average) of 17,444, making the overall trend very weak. However, the market is extremely oversold, and it may surprise with a dead cat bounce in the 17,000–16,900 zone.
On the upside, the 200-DMA of 17,440 will be the first hurdle, and then 17,600 and 17,800 are the next resistance levels. On the downside, 16,777 will be the next support level.
Bank Nifty has also slipped below its 200-DMA (39,578), but 39,000 is an important support level where we can expect a short-covering bounce. On the upside, the 20-DMA around 40,600 will be an important hurdle, while 38,400-38,000 is the next support zone on the downside.
Here are three buy calls for next 2-3 weeks:
Sonata Software: Buy | LTP: Rs 834 | Stop-Loss: Rs 749 | Target: Rs 904 | Return: 8 percent
On the longer timeframe, the counter has witnessed the breakout of a classic peanut formation with huge volume. It has retested its previous breakout level of Rs 750 after hitting a fresh 52-week high.
It is trading above all its important moving averages with a positive bias in momentum indicators. On a longer time scale, it is respecting the flag formation breakout.
On the higher side, Rs 850 is acting as an important psychological level; above this, we can expect the level of Rs 900+ in the near-short term, while on the lower side, Rs 749 will act as a major support during any correction.
Poly Medicure: Buy | LTP: Rs 1,004 | Stop-Loss: Rs 919 | Target: Rs 1,188 | Return: 18 percent
The counter is coming out of more than two years of long consolidation. On the weekly chart, it is ready to give a breakout of an Inverse Head and Shoulders pattern formation. The structure of the counter is lucrative, as it is trading above each of its significant moving averages.
MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised.
On the upside, if it surpasses Rs 1,050, an immediate hurdle, we can expect a move towards the Rs 1,180+ levels. On the downside, Rs 919 will act as a strong demand zone.
Cigniti Technologies: Buy | LTP: Rs 784 | Stop-Loss: Rs 715 | Target: Rs 894 | Return: 14 percent
Multiple bullish setups have occurred on the counter, including a breakout of an ascending triangle formation and a breakout of a flag formation with strong volume. On the weekly chart, it has witnessed a breakout of an Inverse Head and Shoulders formation.
Most of the momentum indicators are positively poised and support the breakout move in this counter. On the upside, if it surpasses Rs 800, an immediate hurdle, we can expect a move towards Rs 880 level. On the downside, Rs 715 will act as a strong demand zone.
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