Nifty witnessed a gap up opening on August 4 and created a continuation gap on the daily chart and since then it has been trading in a very narrow range of 16,200–16,350.
The index on August 11 opened in the green but couldn’t hold its opening gains. It closed above 16,250.
Out of the last five trading sessions, Nifty formed a Doji-type candlestick formation in three sessions and whenever it dipped near 16,200 – 16,150 levels, we have seen a smart recovery.
Long wicks are getting formed in the daily candlestick chart. This setup indicates a volatile market and buying occurs near the demand zone of the index.
Market breadth has been in the favour of the bears for the last couple of trading sessions.
Nifty has given a bullish pole flag pattern breakout on the weekly chart and higher high, higher low formation is likely to continue ahead.
Momentum oscillator RSI (14) has also given a horizontal trendline breakout at 63 level and is currently closed above 69 level with bullish crossover on the weekly interval.
Currently, the benchmark index is trading above its major exponential moving averages. Major resistance is placed near 16,450 -16,500 and on the downside, the major support zone is at 16,150-16,000.
Here are three buy calls for the next 2-3 weeks:
Cummins India | Buy | LTP: Rs 946.50 | Target price: Rs 1,010 | Stop loss: Rs 906 | Upside: 7%
The stock is trading above its 21, 50 and 100- day exponential moving averages on the daily timeframe, which is a positive sign for the near term.
There has been an above-average volume set up in the last couple of weeks on the daily chart which indicates a phase of accumulation.
Momentum oscillator RSI (14) is above 60 level with positive crossover on the weekly scale.
HCL Technologies | LTP: Rs 1,067 | Target price: Rs 1,140 | Stop loss: Rs 1,024 | Upside: 7%
This stock is trading above its 21, 50 and 100- day exponential moving averages on the daily timeframe, which is a positive sign for the near term.
There has been an above-average volume set up in the last couple of weeks on the daily chart which indicates a phase of accumulation.
Momentum oscillator RSI (14) is above 60 level with positive crossover on the daily scale.
Kotak Mahindra Bank | LTP: Rs 1,778.60 | Target price: Rs 1,874 | Stop loss: Rs 1,725 | Upside: 5%
This stock has witnessed a falling wedge pattern breakout on the weekly timeframe. It is trading above its trendline resistance.
The stock had been trading in a narrow range between Rs 1,650 and Rs 1,700 for the last four weeks.
On August 11, it slipped near its trendline support and most likely completed its throwback of the bullish pattern on the daily interval.
It is trading above its short and medium-term exponential moving averages on the daily as well as the weekly chart.
Momentum oscillator RSI (14) is above 50 level with positive crossover on the weekly scale which indicates the uptrend may resume soon.
(The author is a Technical Analyst at Bonanza Portfolio)
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