Santosh Meena, Head of Research at Swastika Investmart
The Nifty is witnessing a correction from the 16,800 level followed by a stellar rally of more than 1,000 points from a low of 15,700. The correction can be attributed to fresh worries of monetary tightening and inflation as energy prices are continuing their upward journey.
The RBI policy will be a key trigger on the domestic front where commentary and the quantum of the rate hike will be important. After then, US inflation numbers and the FOMC meeting will be the next crucial triggers for the global equity markets.
Technically, 16,400-16,350 is a critical demand zone where we can expect a bounce-back, while 20-DMA (days moving average) of 16,250 is the next sacrosanct support mark because below this, the Nifty is vulnerable to a move towards 16,000-15,700 zone. On the upside, 16,500 is an immediate hurdle then 16,700-16,800 are the next resistance levels.
Bank Nifty has an immediate demand zone of 34,800-34,650 where we can expect a rebound, while a move below 34,500 may again lead to selling pressure towards 34,000-33,500 levels. On the upside, 35,300-35,500 is an immediate resistance zone. Above this, we can expect a rally towards 35,700-36,000 levels.
The derivative data is slightly oversold and that may help in a short-covering bounce.
Here are three buy calls for next 2-3 weeks:
KEI Industries: Buy | LTP: Rs 1,317 | Stop-Loss: Rs 1,200 | Target: Rs 1,500 | Return: 14 percent
The counter is in a classical uptrend and now it is breaking out of ascending triangle formation to resume its uptrend. The breakout coincides with rising volume and it manages to sustain above breakout level despite weakness in the broader market.
It is trading above its all-important moving averages with a positive bias in momentum indicators. On the downside, a cluster of moving averages around Rs 1,200 level will act as a strong support level.
Elgi Equipments: Buy | LTP: Rs 380.4 | Stop-Loss: Rs 345 | Target: Rs 422 | Return: 11 percent
The counter is in a bullish momentum and forming a bullish flag formation to continue this momentum for further upside where the previous swing high around Rs 422 is an immediate target level.
On the downside, the previous breakout level of Rs 360 is an immediate support level while Rs 350-340 is also a strong demand zone. Momentum indicators are positively poised to support the current strength of the trend.
NHPC: Buy | LTP: Rs 33.9 | Stop-Loss: Rs 32.3 | Target: Rs 37.5 | Return: 11 percent
There is a classical bullish setup as the counter had witnessed bullish flag formation in April month then it created a strong base at 200-DMA followed by a healthy correction.
It is trading above its all-important moving averages and ready to breakout bullish Inverse Head and Shoulder formation that may lead to a rally towards the previous swing high of Rs 37. On the downside, a 20-DMA of Rs 32.5 will act as an immediate and strong support level.
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