In the previous week we saw Nifty50 witnessing a breakdown from its rising channel pattern and taking strong support near its 21-day exponential moving average. This week we witnessed a smaller degree V-shape reversal pattern on the daily time frame and prices were able to close above the 18,100 levels for the first time.
In the past three to four occasions whenever prices entered into a correction mode, 21-day exponential moving average acted as an anchor point for the index. And recently, the index whipsawed its bearish engulfing candlestick pattern on the daily chart and successfully closed above the high of the pattern. Whenever we saw a failure of a bearish pattern in the index, it witnessed a much stronger trend on the higher side.
On October 13, the benchmark index opened with half a percent of gain and gave a breakout of a horizontal trend line which was placed near 18,000 levels and closed convincingly above the 18,100-levels confirming a strong bull market breakout on the daily interval.
Meanwhile, the Nifty Auto index has given a breakout of a channel pattern and on the weekly time frame and is expected to outperform in the coming weeks.
As the Nifty50 has given a breakout on the daily chart, every dip should be utilized as a buying opportunity. The immediate support for the Nifty50 is placed near 17,950 - 18,000 levels which was the previous resistance zone for the index. And the resistance or the next immediate target for the Nifty comes near 18,500 levels.
Banking Index has continued to trade within the rising channel pattern with the higher top higher bottom formation. Recently, the index was also able to close above its 21-day exponential moving average which is positive for the prices. After forming a Bullish Hammer candlestick pattern on the daily chart, prices have never retested the low of the pattern and traded higher amid volatility on the daily time frame. Major resistance is placed near 39,500 levels & on the downside; if prices break below 37,500 then we may test 36,000 levels.
Here are three buy calls for next 2-3 weeks:
Dhampur Sugar Mills: Buy | CMP: Rs 329 | Stop Loss: Rs 315 | Target: Rs 360 | Return: 9.50 percent
The prices were trading in a symmetrical triangle pattern since past two months and have formed a trend line resistance at Rs 320 levels.
Dhampur Sugar has broken out of a symmetrical triangle pattern at Rs 325 levels on October 12 and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100-day exponential moving averages on daily time frame, which is positive for the prices in the near term.
MACD indicator is reading above its centerline with positive crossover above its signal line. Momentum oscillator RSI (14) is reading near 60 levels which indicates positive momentum will like to continue ahead.
Indian Bank: Buy | CMP: Rs 163.55 | Stop Loss: Rs 150 | Target: Rs 189 | Return: 15.6 percent
Indian Bank was trading in a broad range of Rs 125 – 155 from last eight months and has formed ascending rectangle pattern on the daily time frame. On October 12, prices have witnessed a breakout of an ascending rectangle pattern at Rs 159.80 levels.
Stock is trading above its 21, 50 & 100-day exponential moving averages on a daily time frame, which is positive for the prices in the near term.
When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading above 60 levels with positive crossover on the weekly scale.
Maruti Suzuki: Buy | CMP: Rs 7,482.15 | Stop Loss: Rs 7,180 | Target: Rs 8,010 | Return: 7 percent
Maruti has given a spectacular rally from the low of Rs 4,001 on April 3, 2020, to an high of Rs 8,329 on January 15, 2021, and post that rally prices went in a sideways consolidation for almost eight months and traded in a range between Rs 6,600 to Rs 7,200 levels.
Maruti has formed a symmetrical triangle formation on the weekly chart within that eight months period and finally broken out of a symmetrical triangle pattern at Rs 7,430 levels on October 8 and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
Stock is trading above its 21, 50 & 100-day exponential moving averages on a weekly time frame, which is positive for the prices in the near term.
When we observe volume activity there has been above-average volume set up from the past couple of weeks on the daily chart, which indicates accumulation phrase. Momentum oscillator RSI (14) is reading near 60 levels with positive crossover on the weekly scale.
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