Nifty has rallied more than 85 percent from the lows witnessed in March 2020. The index has managed to sustain above the level of 14,000. It has rallied almost 14 percent above the previous all-time high of 12,430.
However, in the recent rally, momentum oscillator RSI, on the monthly chart, has registered a higher peak and has also broken out from the long-term trendline.
Though Nifty has reached the long-term upward sloping trendline resistance, development on the RSI oscillator indicates the probability of the continuation of an uptrend.
MSCI emerging market, Asian-Ex Japan and world index have broken out from the long-term trendline on their monthly charts.
Breadth indicators such as advance-decline trend, number of 52-week highs and the number of stocks above their 200-day moving averages hint at a healthy market.
A stable rupee and weak dollar index also augur well for the Indian equity markets for the Year 2021.
In the month of November 2020, Nifty retraced 100 percent of the entire downswing seen from January 2020 top of 12,430) to March 2020 bottom of 7,511).
More than 100 percent retracement gives birth to fresh bull markets and now Nifty is in the continuation of an uptrend.
The benchmark index is now expected to retrace 138.2 percent, 150 percent and 161.8 percent retracement, which are placed at 14,309, 14,890 and 15,470 levels, respectively.
The target of 15,470 is 10 percent away from the current levels, which could be achieved in the year 2021.
Though a 10 percent rally in the index is not a big number, the stock-specific returns could be much better.
We cannot rule out the possibility of the running corrections at regular intervals but those dips should be considered as a buying opportunity.
The short-term support for Nifty is seen at 13,865 odd levels. Medium-term support for the index is placed at 13,590, which happens to be 123.6 percent retracement of the swing seen from 12,430 to 7,511.
Here are three buy calls for the next 2-3 weeks:
The stock has broken out from an ascending triangle pattern on the daily chart. Volume during the breakout was much higher than the previous sessions.
The stock has also broken out from the medium-term downward sloping trendline on the daily charts.
It has broken out from the multiple top resistance placed at Rs 864 which has resulted in the breakout from the last 10 weeks' price consolidation.
The stock is trading above all important moving averages, indicating a bullish trend on all timeframes. Indicators and oscillators like MACD, DMI and RSI have turned bullish on the short to medium-term charts.
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On December 23, 2020, the stock broke out from the rectangle pattern on the charts.
It has been finding support on its 50-day EMA. Volumes during the breakout remained significantly higher.
The short-term moving averages are trading above medium to long-term moving averages. Indicators and oscillators like MACD, RSI and DMI have turned bullish on the daily chart.
Mid-cap IT companies have been outperforming for the last many months.
The stock has broken out from the bullish flag pattern on the daily chart.
The stock has also ended the consolidation which held for the previous 5 weeks. In November 2020, the stock broke out from the multi-month long-term consolidation.
Follow-up buying was witnessed in the month of December with good volumes, which confirms the primary uptrend.
The stock recently took support at its 20-day EMA and reversed northward. The stock price is placed above all important moving averages, indicating a bullish trend on all timeframes.
Moreover, the insurance sector has started outperforming the broader markets.
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