Nandish Shah
Nifty gained 69 points on the first day of the week to close at 11,247 levels.
Last week, Nifty consolidated in a narrow range of 11,375-11,240 for the first four sessions and broke that range on the lower side in the last session of the week.
During that fall last Friday, Nifty took support at 20-day EMA which is placed at 11,122 currently. This support also coincides with the support derived from the rising wedge lower trendline.
In the Nifty options segment, we have seen Put writing at 11,100 during the last two days. Therefore, there are multiple pieces of evidence that suggest the Nifty is likely to find strong support around 11,100 levels and unless it closes below that, the uptrend is still intact.
On the higher side, Nifty has been finding stiff resistance in the range of 11,350-11,400. If we were to draw an upward sloping trendline, adjoining major bottoms of October 2018 and September 2019, it projects the
strong resistance in the zone of 11,350-11,400.
This range acted as a support in history and now it is expected to act as resistance going forward.
Nifty Mid and Smallcap indices have outperformed the benchmark in August till now as they are up 6 percent and 8 percent, respectively, against a 1.5 percent rise in the Nifty till now.
The advance-decline ratio has been positive for the ten out of eleven trading sessions in August till now.
Our advice is to remain long in Nifty with the trailing stop loss of 11,100 levels. Resistance is seen in the range of 11,350-11,400 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 buy calls for the next 2-3 weeks:
EIH | Buy | LTP: Rs 78.90 | Target price: Rs 90 | Stop loss: Rs 73 | Upside: 14%
The stock has broken out on the daily line chart, where it has closed at a four-month high.
Volumes have been rising along with the price rise during the last few days. The short-term trend is positive where the stock price is trading above its 5 and 20-day SMA.
+DI is placed above the -DI while the ADX line is placed above 25, indicating momentum in the uptrend.
Just Dial | Buy | LTP: Rs 407.50 | Target price: Rs 450 | Stop loss: Rs 380 | Upside: 10%
The stock has broken out from the consolidation of the last one-and-a-half month on the daily chart with a rise in the volumes and closed at two months high.
The short-term trend of the stock is positive as it is trading above its 5 and 20-day SMA. Oscillators and momentum indicators like RSI, MFI and MACD are showing strength in the stock.
+DI is placed above the -DI, indicating strength in the uptrend.
The stock has broken out on the daily chart to close at six months high. The primary trend of the stock is positive where it is trading above its 200-day SMA.
The stock is forming a bullish higher tops higher bottom on the daily chart. Daily RSI oscillators are placed above 60 levels, indicating a bullish setup for the stocks.
+DI is placed above the -DI while the ADX line is placed above 25, indicating momentum in the uptrend.
(The author is Technical Research Analyst at HDFC Securities)
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