Indian markets rebounded sharply on April 26, thanks to a pullback in global markets and a fall in crude oil prices. Technically, the Nifty is respecting the 50 percent retracement of its previous rally, however, 17,200-17,300 is an immediate and critical resistance zone because it is a cluster of 200 and 100- day moving averages (DMAs).
Any decisive move above this zone can lead to a short-covering rally towards a 20-DMA of 17,450. On the downside, 17,100-17,000 is an immediate demand zone, while 16,800 is a sacrosanct support level.
If we look at the derivative data, it is turning bullish ahead of the April F&O expiry, where the highest open interest on the Put side has shifted to the 17,000, indicating a base at this level, while the highest open interest on the Call side shifted to 17,500. The put-call ratio has moved to 1.06 level from oversold territory.
The Bank Nifty also respected 50 percent retracement of the previous rally, however, 36,500-37,000 is a critical resistance zone. Above this resistance zone, we can expect a short-covering rally towards 37,500-38,000.
On the downside, the 36,000 will act as an immediate and psychological support level. FIIs' flow, global market direction and earning session will remain key triggers for the market ahead of the F&O expiry.
Here are three buy calls for the next two-three weeks:
Prakash Pipes: Buy | LTP: Rs 194.75 | Stop-Loss: Rs 180 | Target: Rs 220 | Return: 13 percent
The counter is showing great strength after breaking out of ascending triangle formation. It took support at 20-DMA during pullback and now it is breaking out previous swing high to resume its strong bullish momentum.
On the upside, Rs 211-220 are immediate target levels, while on the downside, Rs 190 will act as immediate support. Most of the momentum indicators are positively poised to support the strength in the counter.
EID Parry: Buy | LTP: Rs 543 | Stop-Loss: Rs 505 | Target: Rs 625 | Return: 15 percent
The counter has been continuously making higher highs and higher lows and is now taking out multi-month resistance with decent volume that may generate further thrust towards Rs 575-625.
On the downside, Rs 510 will act as strong support now. It is trading above its all-important moving averages with a positive bias in momentum indicators.
Suven Pharmaceuticals: Buy | LTP: Rs 601 | Stop-Loss: Rs 560 | Target: Rs 675 | Return: 12 percent
The counter is bouncing back from a strong demand zone of Rs 560-550 after a pullback. The demand zone of Rs 560-550 coincides with the previous breakout level and the 50-DMA.
On the upside, the previous swing of Rs 630 is the immediate hurdle, while Rs 675 is the next resistance level. Moving average convergence divergence (MACD) is trading above the centerline, while the relative strength index (RSI) is witnessing a positive crossover from the support of 40.
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