Nifty has been witnessing a choppy trend for the last six consecutive weeks, wherein rallies are sold into and dips are getting bought into.
'Sell on rallies' and 'buy on dips' kind of strategy has been playing out in the current market scenario as far as benchmark indices like Nifty and Bank Nifty are concerned.
However, the primary trend of the market is bullish as short-term moving averages are above medium to long-term moving averages and Nifty has been holding higher tops and higher bottoms.
In the last two sessions, Nifty witnessed a correction of almost 600 points from the high.
On March 15, 2021, Nifty found support at a 50-day moving average and bounced back sharply from the low.
The upward sloping trendline, adjoining the lows of weeks ended March 27, 2020, November 6, 2020, and February 5, 2021, projects the strong support around 14,700 odd levels, which coincides with the 50-day moving average support.
The recovery from this support has increased the chances of the resumption of an uptrend in the Nifty.
It seems that Nifty is on the verge of ending the recent consolidation and entering the bullish momentum phase again.
The Nifty Smallcap index has outperformed the Nifty with a huge margin by not even breaching its 8-day EMA on a closing basis.
The breadth of the market looks strong enough to give an indication that every dip is a buying opportunity.
Nifty should be held long with a stop loss of 14,700. Upside targets for Nifty are seen at 15,300 and 15,450.
Metals, real estate, cement and infra are the sectors in which investors should park their money in a phased manner.
We expect mid-cap and small-cap indices to continue their outperformance over Nifty.
Here are three buy calls for the next 3-4 weeks:
Fortis Healthcare | Buy | LTP: Rs 185.85 | Target price: Rs 215 | Stop loss: Rs 168 | Upside: 16%
There are few sessions left to complete the entire quarter and so far, this is the highest quarterly close for Fortis.
There are good chances that it will confirm this breakout by sustaining above Rs 183 odd levels by the end of March.
On the week ended March 5, 2021, this stock broke out from a bullish flag pattern on the weekly charts with higher volumes.
It has been trading above all important moving averages. Indicators and oscillators like RSI, MACD and DMI have turned bullish on the short-term charts.
Edelweiss Financial Services | LTP: Rs 85.75 | Target price: Rs 99 | Stop loss: Rs 77 | Upside: 15%
This stock has taken out the crucial double top resistance placed at Rs 84 on the weekly charts.
Volumes during the breakout remained significantly higher as compared to previous weeks. The primary trend of the stock has been bullish with higher tops and higher bottoms on the daily and weekly charts.
The stock is placed above all important moving averages. Besides, mid-cap stocks from the NBFC and broking industry have started outperforming.
Godrej Industries | LTP: Rs 503 | Target price: Rs 575 | Stop loss: Rs 455 | Upside: 14%
This stock has broken out from bullish inverted head and shoulder patterns on the monthly charts.
It has recently taken out the crucial double top resistance placed at Rs 483. Moving average and oscillator setup looks bullish on daily and weekly charts.
(The author is Senior Technical Research Analyst at HDFC Securities)
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