Nandish Shah
Nifty continued its northward journey for the fourth consecutive day on July 20. The index conquered 11,000 level to close at a four-month high at 11,022, the highest since March 5.
Last Friday, Nifty managed to close above its last 10-day trading range, confirming the breakout from the narrow range. It also managed to close above its 200-day SMA, only after February 2020.
Nifty has also witnessed a bullish dominance by +DMI and ADX on the daily chart. Whenever Nifty witnesses such formation on ADX indicator, it tends to move higher.
Earlier resistance of 10,800-10,850 level would interchange its role as a support.
On the derivatives front, we have seen Put writing at 10,800-11,000 levels. The 5-day SMA is placed at 10,778 levels.
Therefore, 10,800-10,850 level would act as immediate support for Nifty. On the higher side, resistance is seen around 11,200-11,250 level.
After running corrections for few days, mid and small-cap Indices resumed their uptrend again last Friday.
The advance-decline ratio was positive for the last two days. We believe that small-caps, which outperformed the benchmark Index during this rally, will continue their outperformance for the coming weeks also.
Our advice is to remain long in Nifty with the trailing stop loss of 10,778 levels. Resistance is seen in the range of 11,200-11,250 levels.
The focus of the traders should be on mid and smallcaps that are likely to continue their outperformance for the coming weeks and months.
Here are three mid-caps buy recommendations for the next 3-4 weeks:
After consolidating for the last few days, the stock resumed its uptrend with a rise in the volumes.
It closed at a six-month high level. The short-term trend of the stock is positive as it is trading above its 5 and 20-day average.
Oscillators and momentum indicators like RSI, MFI and MACD are showing strength in the stock. Fertilizer as a sector is doing well.
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The stock has broken out from the descending triangle on the daily chart, indicating the continuation of an uptrend.
Volumes have been rising along with the prices. The primary trend has been bullish with higher tops and higher bottoms on the daily and weekly charts.
The stock has broken out from the long-term downward sloping trendline on the monthly charts.
Momentum indicators and oscillators have been showing strength in the existing uptrend of the stock.
The stock has already broken out from the downward sloping trendline, adjoining the highs of February 11 and June 4, 2020.
The short-term trend of the stock is positive as it is trading above its 5 and 20-day average.
Daily RSI is placed above 60 levels, indicating a bullish setup for the stocks. + DI is trading above -DI, indicating bulls are having an upper hand.
(The author is a technical research analyst at HDFC Securities)
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