Indian equity benchmark index Nifty sees profit-booking from a resistance area of 16,700-16,800, followed by a smart rebound from the lows of 15,183. The overall structure is bullish with a 'buy on dip' texture, however, the profit-booking may see further extension where 16,350 is the first support of gap area, while 16,050 is the second and major gap area which is a sacrosanct support level at any correction.
On the upside, if the Nifty manages to take out 16,800 resistance, then 200-DMA (days moving average) of 17,000 is the next major hurdle.
Bank Nifty is outperforming and trading above its 200-DMA, however, downsloping trendline resistance around the psychological level of 37,000 is acting as an immediate hurdle and leading to profit booking. On the downside, 36,000 is an immediate support level while 35,500-35,000 is a critical demand zone at any meaningful correction.
FIIs are again taking some short bets in the F&O market ahead of the July month F&O expiry whereas the Put Call ratio is also slipping below the 1 mark. If we look at the open interest distribution then the highest open interest on the Call side is placed at 17,000 mark while it is scattered between 16,500-16,000 zone on the Put side.
Q1 earnings are leading to stock-specific movements while the outcome of the US FOMC meeting will be critical for the direction of the overall market.
Here are three buy calls for next 2-3 weeks:
West Coast Paper Mills: Buy | LTP: Rs 382.85 | Stop-Loss: Rs 350 | Target: Rs 425 | Return: 11 percent
The overall structure of this counter is bullish and it is resuming its bullish momentum followed by a breakout of a Cup and Handle formation on the daily chart.
It is trading above its all-important moving averages with a positive bias in momentum indicators. MACD (moving average convergence divergence) is trading above its centerline whereas RSI (relative strength index) is placed above the 60 mark to support the current momentum.
Aegis Logistics: Buy | LTP: Rs 263 | Stop-Loss: Rs 244 | Target: Rs 300 | Return: 14 percent
The counter is bottoming out with a breakout of a bullish Inverse Head & Shoulder formation. The breakout is led by heavy volume and closing above the breakout level for three consecutive days.
The immediate target is Rs 300, however, the pattern suggests higher levels. On the downside, the breakout level of Rs 240 will act as an immediate and strong support level while Rs 228-217 are the next important support levels.
JK Cement: Buy | LTP: Rs 2,423.85 | Stop-Loss: Rs 2,250 | Target: Rs 2,720 | Return: 12 percent
The counter is witnessing a smart bounceback with a rounding bottom formation and it managed to close above its 100-DMA. On the upside, Rs 2,500 is an immediate hurdle. Above this, we can expect a move towards its 200-DMA.
On the downside, Rs 2,270-2,220 is a strong demand zone at any pullback. MACD has moved above its centerline whereas RSI is also showing strong positive divergence.
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