Nifty50 has maintained its higher top-higher bottom formation on all time frames i.e. monthly, weekly & daily charts and has continued to make fresh lifetime highs which shows a strong bullish undertone for the market for the medium-to-long term.
On the daily time frame, Nifty is facing some resistance at higher levels and the index has been moving sideways for the last couple of sessions after facing rejection near the 15,431 mark.
The index remains above the long-term moving averages of 50 Day-100 Day and 200-Day SMA. The RSI plotted on the medium and long term time frame is rising, which indicates that the medium and long term trend of the index is bullish.
In the short term, key support levels are 14,977 (2 week- low) followed by 14,750 (previous swing high).
On the upside, the key resistance levels are 15,431 (all-time high). If the index sustains above this level, we might see the index head higher towards 15,500 and eventually 15,838.
Based on the above analysis and the technical parameters mentioned, we believe that the medium and long-term bullish trend remains intact. Our bullish view will be reevaluated if the index breaches below the 14,977 levels.
Here is a list of the top three trading ideas for the next 3-4 weeks:
State Bank of India: Buy | Target: Rs 456-488 | Stop Loss: Rs 385
The Nifty PSU Bank index has been one of the strongest outperformers among the sectoral indices and has been outperforming Nifty for the past few weeks. SBI has been a star performer in the PSU bank space.
A couple of weeks ago, it hit a fresh all-time high with a gap-up opening and breached the Rs 400 mark. Since then, it retested that gap and bounced back from there, which shows a strong bullish undertone of the stock in the medium to long term.
This week, the counter has once again tested fresh all-time high and maintained its higher top-higher bottom formation which indicates that the next leg of the bull run is ready to start.
We witnessed strong volume confirmation in every bullish movement which strengthens the ongoing uptrend.
On the indicator front, the ADX plotted on the medium-term can be seen moving higher, indicating strong momentum of the current up move.
Going ahead, the immediate resistance is placed at Rs 456 followed by Rs 488. Key support levels are placed at Rs 385 and Rs 358 levels.
One can buy the stock at current levels and add on dips till Rs 400 for the target of Rs 456, followed by Rs 488 with a strict stop loss of Rs 385 on a closing basis.
D-MART: Buy | Target: Rs 3340 | Stop Loss: Rs 3045
D-MART has maintained its Higher Top-Higher Bottom formation on all time frames like daily, weekly and monthly charts which show strong positive undertone of the stock for the medium to long term.
On Wednesday, the stock tested a fresh all-time high level at Rs 3,242 and also gave the highest closing ever on the daily chart which indicates that the stock is now ready to move higher.
The momentum indicator RSI plotted on multiple time frames can be seen placed above 60 levels, indicating that the stock is currently in a strong bullish momentum.
The resistance is placed at Rs 3,340 followed by Rs 3,539 and eventually towards the Rs 3,792.
The key level to watch for on the downside are Rs 3,045. One can buy the stock at current levels for the initial target of Rs 3,340 with a strict stop loss of Rs 3,045 on a closing basis.
NCC: Buy | Target: Rs 119-141 | Stop Loss: Rs 82
On the monthly charts, the NCC has formed a Triple Bottom pattern and also took multi-year support near 20 levels in March 2020 and has bounced back from there and maintained a Higher Top-Higher Bottom formation on all the time frames.
On the weekly charts, we have seen a sharp up move couple of weeks back, with strong volume confirmation.
The RSI plotted on multiple time frames can be seen placed above the 60 levels, suggesting that the stock is currently in a strong positive momentum.
Going ahead, the immediate resistance is placed at Rs 119 followed by Rs 141. Key support levels are Rs 82 and Rs 71 levels.
(The author is AVP Technical Research at GEPL Capital)
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