The Nifty50 continued its winning streak for the sixth day on the trot on Monday where it gained 34 points to close at yet another fresh peak of 16,563 levels.
The intermediate uptrend remains bullish as the Nifty continues to make higher tops and higher bottoms over the last several months. The Nifty50 has been trading above the 20 and 50-day EMA, which gives further evidence of an uptrend.
With intermediate and long-term momentum readings like 14-week and 14-month RSI in rising mode and not showing any signs of negative divergence, we expect the uptrend to continue.
The slope of Daily ADX for Nifty is rising, which indicates that the index could gain momentum in the near term.
In the Options segment, we have seen Put writing at 15,200-15,400 levels. During the last correction, the Nifty has found support at 16,163 and then bounced back.
This level coincides with the 20-day EMA which is currently placed at 16,150 odd levels. Therefore, we believe that the short-term trend will remain intact till Nifty is trading above 16,150 levels.
While we remain open to further upsides, a short-term trend reversal would be confirmed only if the Nifty closes below the 16150.
The immediate targets for the Nifty is seen around 16,700-16,800 level, at which we have seen call writing. Far resistance is seen around 17,100 levels.
During the last week, Bank Nifty has broken out on the weekly chart by surpassing the previous resistance of 36,134 levels.
Private Banks, PSU Banks, and NBFC space should be on the radar for getting higher returns in the coming days. Bank Nifty is expected to move towards the next targets of 36,500 and 37,700 levels for the coming weeks.
To conclude, the Nifty50 has already broken out from the trading range of 16,150-16,380 last week. We expect momentum buying to continue for the coming weeks.
The next upside target of Nifty50 is seen around 16,800 levels, followed by 17,100. Longs should be protected by placing a stop loss placed below 16,150 in Nifty and 35,400 in the Bank Nifty.
Here are three buy recommendations for the next 2-3 weeks:
GSPL: Buy| LTP: Rs 358| Target: Rs 410| Stop-Loss: Rs 330| Upside 14%
The stock price has broken out on the daily line chart to close at an all-time high level. Accumulation is seen during the last few days where volumes are higher during the up days as compared to the down days.
Plus, DI is placed above the Minus DI while ADX line is sloping upwards which indicates that the momentum in the current uptrend.
Oscillators like RSI and MFI showing strength in the current uptrend of the stock. Therefore, we recommend buying GSPL at a CMP of Rs 358.6 for the target of Rs 410, and keep a stop loss below Rs 330.
Relaxo Footwear: Buy| LTP: Rs 1210| Target: Rs 1330| Stop-Loss: Rs 1150| Upside 10%
The stock is forming a bullish higher top higher bottom pattern on the weekly and monthly chart. It has broken out from the downward sloping trendline on the daily chart by closing above the resistance level of Rs 1,170 with higher volumes.
Daily RSI has shown trend line breakout, which is a bullish development for the short term. Plus, DI is placed above the Minus DI while ADX line has started slopping upwards, Indicating momentum in the current uptrend.
Therefore, we recommend buying Relaxo Footwear at CMP of Rs 1,210 for the target of Rs 1,330, and keep a stop loss below Rs 1,150.
Tata Consumer: Buy| LTP: Rs 802| Target: Rs. 890| Stop-loss: Rs 760| Upside 11%
Last Friday, the stock price had broken out on the daily and weekly chart with higher volumes to close at all-time high levels.
The stock price has formed a strong base around Rs 750 levels by taking supports multiple times around that level.
The slope of Daily ADX for Nifty has now turned positive, which indicates that Tata Consumer could gain momentum in the near term. +DI is placed above –DI, which implies that direction of the trend is still bullish.
Oscillators like RSI and MFI showing strength in the current uptrend of the stock. Therefore, we recommend buying Tata Consumer at CMP of Rs 802 for the target of 890, keeping a stop loss below 760.
(The author is a Technical Research Analyst, HDFC Securities)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.