Nifty, for the last 5 weeks, has consistently been forming a higher high higher low pattern and testing the lifetime highs.
In the previous session, the index not only broke the 13,500 mark but also managed to close above it.
On the open interest front, the highest OI of monthly series is seen at 13,000 and the 13,500 Call which seems to be witnessing a long built-up.
On the Put side, the highest participation is seen at 13,000 which seems to be witnessing a short build-up.
We can expect the broader range of the index to be between 13,000 and 13,600. We can see a rangebound move from 13,600 to 13,000 levels.
On the indicator front, they continue to remain above the long-term moving averages i.e. the 20, 100 and the 200-day SMA.
The ADX line is moving higher as the prices march towards the new lifetime high, which indicates strength in the up-move.
Momentum indicator the RSI is placed in the overbought region, which indicates some correction from higher levels.
Based on the above parameters, we believe that the index is positively biased but we can see some correction till 13,300 – 13,100 levels in the coming days.
We expect the index to be rangebound between 13,600 – 13,100 levels. The key support level is now placed at 13,300 followed by 13,100.
Here are two buy calls for the next 3-4 weeks:
Avenue Supermarts (DMart) | LTP: Rs 2,624 | Target price: Rs 3,063 | Stop loss: Rs 2,413 | Upside: 17%
DMart has given a strong breakout and made a fresh all-time high at the Rs 2,755 mark a couple of days back.
We have seen an ascending triangle pattern breakout on the weekly charts which has been forming since February 2020.
Strong volume has been seen in every upward rally of the stock since May 2020 which indicates strong demand arises at the lower levels of the stock.
On the indicator front, the RSI plotted on the short and medium-term charts is placed above the 60 level and moving higher as the prices move higher, indicating the presence of strength in the up-move.
Based on the above parameters, we believe that the stock is gaining bullish momentum and we expect this momentum to sustain for a while and take the prices higher towards the immediate resistance of Rs 3,063 (100 percent Fibonacci extension level of Rs 1,226 to Rs 2,560), followed by Rs 3,378 (which is 123.6 percent Fibonacci extension level of Rs 1,226 to Rs 2,560).
On the downside, the key support level is placed at Rs 2,413 which is the previous week's low.
One can buy this stock at the current level with a target of 3063 beyond which we might expect the prices to test the 3,378 level with a strict stop loss of 2413 on a closing basis.
Tech Mahindra | LTP: Rs 926.10 | Target price: Rs 1,085 | Stop loss: Rs 865 | Upside: 17%
Tech Mahindra has been moving higher since March 2020. It has given a strong breakout at the previous all-time high level of Rs 887, sustaining above that level which shows strong strength in the uptrend.
A simple chart analysis tells us that the stock has been forming a higher high higher low pattern since March 2020 with increasing volume on weekly charts, indicating strong participation in the stock as the prices move higher.
The ADX plotted on the smaller timeframe can be seen placed above the 25 levels and is moving higher as the prices move higher, indicating strength in the up-move.
The key levels to watch out for on the upside are Rs 1,026 (100 percent Fibonacci extension level of Rs 642 to Rs 887) followed by Rs 1,085 (123.6 percent Fibonacci extension level of Rs 642 to Rs 887).
(The author is AVP-Technical Research, GEPL Capital)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.