Nifty has been trading in a very narrow range for the last couple of weeks. It has formed a pennant-like formation on the daily chart.
Since June 18, the index has been witnessing higher low formation on the daily chart and a horizontal trendline resistance of around 15,900.
Selling emerges whenever the index approaches its lifetime high level.
Nifty50 on July 7 tested its 21-day exponential moving average (EMA) on the intraday chart, from where prices witnessed a positive spurt and closed above 15,850.
Momentum oscillator RSI (14) has formed a rounding formation on the daily chart near 60-level with a bullish crossover.
Bank Nifty has been trading in a higher high, higher low formation within the rising channel pattern on a daily scale.
Prices have been above their 21 and 50-day exponential moving averages and the gap between the two averages is widening on a daily basis which indicates a strong upward trend is likely to unfold in the banking sector.
Some major banking stocks like HDFC Bank and SBI have closed above their conjunction zone and will likely lead the Bank Nifty ahead.
Looking at the current chart set up, we expect a bullish breakout in the benchmark index in the coming trading sessions.
Near-term support for the index is placed near the 15,650 level and once the previous high of 15,915 is sustainably breached, it could rise towards the 16,000 mark and even higher.
Here are three buy calls for the next 2-3 weeks:
Dr. Reddy's Laboratories | LTP: Rs 5,553.90 | Target price: Rs 5,980 | Stop loss: Rs 5,283 | Upside: 8%
This stock, on the weekly chart, has been trading above the rectangle pattern with a higher high higher low formation.
It is trading above its horizontal trendline on the weekly chart which is acting as strong support for the counter.
The stock has given a decisive breakout of a horizontal channel pattern and is currently hovering above the upper band of the pattern on the daily interval.
It is trading above its 21 and 50-day exponential moving averages and the gap between the two averages is widening on a daily basis which indicates a strong upward trend is likely to unfold in the counter.
HDFC Bank | LTP: Rs 1,539.80 | Target price: Rs 1,633 | Stop loss: Rs 1,477 | Upside: 6%
This stock has been trading in a range of Rs 1,420 to Rs 1,520 for almost two months and has formed a symmetrical triangle pattern formation on the daily chart.
It has broken out of a symmetrical triangle pattern at Rs 1,534.70 on July 6 and registered a decisive breakout that suggests a change in the trend from sideways to upside.
The stock is trading above its 21, 50 and 100- day exponential moving averages on the daily timeframe, which is positive for the counter in the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line.
Momentum oscillator RSI (14) is reading near 60 level which indicates positive momentum will continue ahead.
Hindalco Industries | LTP: Rs 393.50 | Target price: Rs 418 | Stop loss: Rs 377 | Upside: 6%
Hindalco has witnessed a falling wedge pattern breakout on the daily timeframe and it is trading above its trendline resistance.
There has been above-average volume on the day of the breakout which confirms price-volume breakout on the daily timeframe.
Momentum oscillator RSI (14) is above 55 level with positive crossover on the daily scale.
During the recent throwback, the stock took support near 38.20 percent Fibonacci retracement which is placed near Rs 360 on the weekly timeframe.
(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.