Nifty has broken out from the last five-day price consolidation which was held between 15,000 and 15,250.
On February 15, Nifty Bank and Nifty Financial Services jumped up to 3 percent and outperformed Nifty by a huge margin.
Bank Nifty has confirmed the bullish flag pattern on the daily chart. The upside target for the pattern comes in at 42,000 odd levels.
The immediate target for Bank Nifty is seen at 38,900 which happens to be 138.2 percent Fibonacci retracement of the entire fall seen from 32,613 (December 2019 top) to 16,616 (March 2020 bottom).
Nifty has been respecting the five-day EMA as a support for the last four trading sessions.
At present, the five-day EMA is placed at 15,170 which can be placed as a stop loss in trading long positions.
The previous top of 14,753 registered on January 21, 2021, is expected to act as positional support for Nifty.
As far as upside resistance is concerned, the level to watch out for is 15,470 which happens to be 161.8 percent of the entire fall seen from January 2020 to March 2020.
The Nifty Smallcap index is still 18 percent away from its all-time high of 9,656, registered in January 2018.
The number of 52-week highs from NSE500 is still lower than 2017, 2014 and 2007 bull markets. This indicates that there is enough room left for small and mid-caps to perform well from here as well.
Earnings season is almost over now and therefore we can expect mid-caps to see momentum buying in the coming days.
Among the sectors, bank, NBFCs and realty look the strongest on the short to medium-term chart.
The ratio chart of PSU banks versus private bank index indicates that the PSU banks could outperform private banks in the medium to long-term.
SBI is having the highest weight in the Nifty PSU Bank index and it is expected to take lead in registering gains.
So, the relative performance of PSU banks could be much better in the days to come.
Instead of anticipating the top in the market, it is better to ride the trend by participating in the rally and keep on trailing the stop loss in longs.
Bullish technical set up is not limited to Indian markets; it is bullish across the globe. Short-term traders are advised to focus on 15,470 as resistance for Nifty.
Here are three buy calls for the next 2-3 weeks:
Can Fin Homes | LTP: Rs 508 | Target price: Rs 580 | Stop loss: Rs 469 | Upside: 14%
This stock has broken out from the medium-term downward sloping trendline on the weekly chart.
It has also broken out from the last 12 week’s narrow price consolidation. Volumes have been rising gradually along with price rise.
The primary trend of the stock has been bullish with higher tops and higher bottoms.
It has been trading above all important moving average parameters. Indicators and oscillators like RSI, MACD and DMI have turned bullish on the short-term charts.
Blue Dart Express | LTP: Rs 4,665 | Target price: Rs 5,160 | Stop loss: Rs 4,300 | Upside: 11%
This stock has broken out from an upward sloping channel on the daily chart.
It has been finding support on its 50-day EMA. Volumes have been rising along with the price rise for the last two weeks.
The primary trend of the stock has been bullish with higher tops and higher bottoms. It has been trading above all important moving average parameters.
Indicators and oscillators like RSI, MACD and DMI have turned bullish on short-term charts.
State Bank of India | LTP: Rs 409 | Target price: Rs 450 | Stop loss: Rs 385 | Upside: 10%
This stock has surged more than 45 percent in February to date which is huge for a large-cap stock.
It has registered a shift in the price momentum and volumes. The stock has broken out from the multi-top resistance, which was held for the last 11 years.
Indicators and oscillators have turned extremely bullish on medium-to- long-term charts.
(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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