Nifty witnessed some sell-off in the early part of the week but managed to bounce sharply holding its short-term average and crossed its last week’s high to close at 10,552 on July 2.
Banks led the up move followed by IT and FMCG.
The pullback from lower levels in broader markets and the two key sectoral indices breaking their 200-day average signals that the headline index Nifty is eyeing its higher band to test its long term average placed at 10,890 levels in the current up move.
It may be negated if it breaks the current week lows placed at 10,225 levels.
Monthly auto sales numbers of June are encouraging after two months' underperformance with a strong positive move in the sector.
The first-quarter results for FY21 will start trickling from the middle of the month which will provide the next direction from the current levels.
We continue to remain positive on defensive sectors like IT and FMCG over the next few weeks.
Here are three buy recommendations for the next 3-4 weeks:
Coal India | Buy | LTP: Rs 133.75 | Target price: Rs 149 | Stop loss: Rs 123 | Upside: 11%
The overall chart structure on the daily and weekly timeframe looks promising to move higher.
There are multiple support levels in the range of Rs 123-127 that offer a good risk-reward ratio from the current levels.
The counter is likely to outperform the benchmark index which is visible on the Relative Strength Indicator on a weekly interval.
NIIT Technologies | Buy | LTP: Rs 1,411 | Target price: Rs 1,570 | Stop loss: Rs 1,314 | Upside: 11%
The stock reversed after testing its 50-day EMA and breached prior daily falling trend.
Its key technical indicators on the near-term timeframe are in buy mode.
The stock has the potential to continue the current up-move and will test higher levels.
On the higher side, the stock will face hurdles around its May month’s high.
Tata Motors | Buy | LTP: Rs 101.65 | Target price: Rs 115 | Stop loss: Rs 92 | Upside: 13%
The stock is trading in an inside range over the last 3 weeks after a sharp breakdown from its recent high of Rs 119 levels in the last month.
The crossover of its short and medium-term averages confirms a positive breakout in line with the sector.
Daily RSI is trading above 50 levels, indicating a bullish setup for the stock having an upper hand.
(The author is Senior Research Analyst at Reliance 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.