Nifty traded in a narrow range throughout the day on November 18 but a sudden spike in the last hour of the session stretched the index to close above the 12,900-mark.
In the previous week, Nifty formed a bearish ABCD harmonic pattern on the daily chart which was placed around 12,800 levels.
The index consolidated for almost 4 days, respecting its resistance, but later on, prices broke its consolidation on the higher side and failed the said bearish pattern.
Now, as per the concept of polarity, previous resistance will act as support in the near-term.
On the daily chart, prices have moved up in the unchartered territory. Also, prices have managed to move above 50-day EMA on the daily chart, indicating a bullish trend.
Daily RSI has moved above the previous swing high, which again is an indication of increased bullishness.
The overall bias is likely to remain positive. On the higher end, the index may move towards 13,050.
A decisive move above 13,050 may trigger a further rally towards 13,200. Crucial support is pegged at 12,750 levels for the near-term.
Here are three buy calls for the next 2-3 weeks:
Ajanta Pharma | Buy | LTP: Rs 1,548 | Target price: Rs 1,675 | Stop loss: Rs 1,470 | Upside: 8%
After prolonged consolidation, the stock has given a breakout of the consolidation range on a monthly timeframe.
The coronavirus pandemic turned out to be a boon for the pharma space as the Nifty Pharma index proceeded to log hefty gains, witnessing a breakout of the five-year-long falling channel pattern on the monthly timeframe.
Ajanta Pharma and the Nifty Pharma index are currently above all their major exponential moving averages (50, 100, & 200) and both are outperforming Nifty which is visible on the Relative Strength (RS) indicator on a month-on-month basis.
We believe that the positional trend of the stock has turned bullish, but looking at the recent volatility it is advisable to utilise short-term dips to accumulate longs.
Bandhan Bank | Buy | LTP: Rs 362.10 | Target price: Rs 400 | Stop loss: Rs 338 | Upside: 10%
The stock has given an inverted head and shoulder pattern breakout on the daily charts.
Volumes have gone up along with the price rise in the recent past.
The stock has got strong support at Rs 330 which is the neckline support of the said bullish pattern.
Oscillators and momentum indicators like RSI and MACD are showing strength in the stock on the weekly as well as daily charts.
The stock is trading above its 20, 50, and 100-day exponential moving averages on the daily interval which is a bullish sign.
Weekly price action suggests the stock is getting ready for an uninterrupted rally as it is moving ahead out of the consolidation range.
REC | Buy | LTP: Rs 116.15 | Target price: Rs 130 | Stop loss: Rs 109 | Upside: 12%
On November 11, the stock finally managed to surpass multiple resistance zones around Rs 105–110, which eventually confirmed a trendline breakout on the daily interval.
Since the breakout, the stock has taken a breather and has witnessed a throwback near its trendline support.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
The stock is trading above its 21 and 50-day exponential moving averages on the daily chart.
Momentum oscillator RSI (14) is reading above 60 levels with positive crossover, which is positive for the counter.
The MACD indicator is reading above its line of polarity with positive sentiments.
(The author is a technical analyst at Bonanza Portfolio)
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