Nifty rose for the sixth consecutive session, to end at new closing all-time high of 18,476. At 18,510, Nifty completed 223.6 percent Fibonacci retracement of the entire swing seen from January 2020 Top to March 2020 bottom. Next Resistance for Nifty comes in at 19,230, which happens to be the 238.2 percent retracement of the swing. Nifty has been opening with the upward gap and closing on a strong wicket for last 3 consecutive sessions.
Nifty has reached in to blue sky territory, where holding long positions with trailing stop loss would be the best approach. In such a scenario, traders should remain with the trend and should not try to anticipate top just by having feeling that market has risen a lot. Momentum is completely in favour of bulls and benchmark indices could extend the gains from current levels too. Previous resistance of 17,950 is expected to interchange its role as a support going forward for Nifty.
Technical setup of Bank Nifty looks very strong, as it registered fresh breakout above 38,400 in the previous week. Upside targets for Bank Nifty are seen at 40,000 and 40,800. Previous resistance of 38,400 is expected to act as a support for the Index. 14-day RSI (relative strength index) has reached at 75.5, which is highest since February 2021. Higher RSI should be considered as a strength in the underlying unless we observe any negative divergence.
Stocks making new 52-week highs from NSE500 has registered trend breakout on the charts. Stocks that are trading above their 200 DMA has also picked up the momentum again. This deveoplement indicates that breadth of the market is getting stronger, which is encouraging sign for healthy bull market.
Nifty Metal Index has registered fresh bullish breakout on the weekly charts. From the sectors, we believe that Metals, Banks, NBFC and Auto would outperform other indices. Stocks from these sectors should be traded long with short term perspective. Realty, PSE and Energy sectors are in continuation of an uptrend and could remain as a market performer.
Technical setup of Global Market Indices and some important base metal commodities have turned bullish again, which is encouraging sign for the Indian Equity market too.
Considering the technical evidences, we believe that trend of the Nifty would remain bullish. Traders are advised to hold long positions with trailing stop loss. At present, stop loss for Nifty should be kept at 18,200. Nifty is expected to extend the rally towards 19,230.
Here are three buy calls for next 2-3 weeks:
Indian Bank: Buy | LTP: Rs 171.45 | Stop Loss: Rs 160 | Target: Rs 199 | Return: 16.1 percent
The stock has broken out from ascending triangle on the weekly charts. Nifty PSU Bank Index has broken out from medium term downward sloping trend line on the weekly charts. Stock price has surpassed the previous two tops on the weekly chart.
Price breakout is accompanied by higher volumes. Primary trend of the stock has been bullish with higher tops and higher bottoms. Stock has been holding levels above its medium to long term moving averages.
Technical Setup of Indian Bank is one of the strongest amongst all PSU Banks.
JK Tyre and Industries: Buy | LTP: Rs 158.95 | Stop Loss: Rs 142 | Target: Rs 192 | Return: 20.8 percent
The stock has broken out from Symmetrical triangle on the daily charts. Price breakout is accompanied by higher volumes. Stock has been consolidating for last 11 weeks.
Tyre stocks have started outperforming from last one week. Nifty Auto Index has broken out on the medium term charts. Primary trend of the stock has been bullish with higher tops and higher bottoms.
The stock has been holding levels above its medium to long term moving averages.
Can Fin Homes: Buy | LTP: Rs 701.55 | Stop Loss: Rs 670 | Target: Rs 780 | Return: 11.2 percent
In the month ended September 2021, the stock broke out from the downward sloping trend-line on the monthly chart with rising volumes. Technical set up of Can Fin Homes is best amongst the other home finance companies.
On October 18, 2021, the stock registered fresh all high at Rs 722. Indicator and Oscillator setup has been showing bullish trend on the weekly charts. Short term moving averages are placed above medium term moving averages.
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