After a hefty rally seen during the last few weeks, the market seems to have taken a breather with Nifty trading in a tight range for the last five days
The intermediate uptrend remains bullish as Nifty continues to make higher tops and higher bottoms over the last several months.
Nifty has been trading above the 20 and 50-day exponential moving average (EMA) which gives further evidence of an uptrend.
With intermediate and long-term momentum readings like the 14-week and 14-month RSI in rising mode and not showing any signs of negative divergence, we expect the uptrend to continue.
In the Options segment, Put writing was seen at 17,000-17,200 levels. During the last correction, Nifty has found support around that level and bounced back.
This level also coincides with the 20-day EMA which is currently placed at 16,950 odd levels.
Therefore, we believe that the short-term trend will remain intact till Nifty is trading above 16,950 levels.
After the sharp rally of nearly 1,500 points in the Nifty during the last few weeks, it is possible that the index may consolidate in the coming days.
However, we believe there is a lot of opportunity in the mid and smallcap stocks.
During the last five days, while Nifty remained in the narrow range, broader market indices outperformed as they gained up to 3 percent.
We believe that one should focus on mid and smallcap stocks for higher returns from hereon.
Here are three buy recommendations for the next 2-3 weeks:
RHI Magnesita India | LTP: Rs 387.45 | Target price: Rs 430 | Stop loss: Rs 365 | Upside: 11%
This stock has broken out from the downward sloping trendline on the daily chart with higher volumes and closed at an all-time high level.
The trend of the stock is positive as it is trading above its all-important short and long-term moving averages.
Plus DI is placed above the minus DI while the ADX line has started slopping upwards, indicating the stock is likely to gather momentum in the coming days.
Daily RSI has shown trendline breakout which is a bullish development for the short term.
Century Plyboards | LTP: Rs 412.05 | Target Rs. 460 | Stop-loss Rs 385 | Upside: 12%
After taking support at 100-day EMA multiple times, this stock reversed northwards to close above its 5 and 20-day EMA.
The primary trend of the stock is positive as it is trading above its 50, 100 and 200-day EMA.
Daily RSI has shown a trendline breakout which is a bullish development for the short term.
Accumulation has been seen during the last few days as volumes have been higher during the up days compared to down days.
Once this accumulation is over, the stock may witness a sharp up-move.
RPSG Ventures | LTP: Rs 785.75 | Target price: Rs 905 | Stop-loss Rs 730 | Upside: 15%
This stock has broken out on the daily line chart to close at an all-time high level with higher volumes.
It has broken out from the bullish flag pattern on the weekly chart, indicating the continuation of the primary uptrend.
Accumulation has been seen in the last few weeks as volumes have been sharply higher during the up weeks compared to down weeks.
Plus DI is placed above the minus DI while the ADX line is placed above 25 while slopping upwards, indicating momentum in the coming uptrend.
Daily RSI and MFI line have witnessed a trendline breakout which is a bullish development for the short term.
(The author is a technical research analyst at HDFC securities)
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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