Nifty fell sharply on April 5 as rising COVID-19 cases and increased restrictions spooked investors. The index ended the day with a loss of 230 points at 14,637.80.
However, from the intraday low, it recovered nearly 200 points and closed above its 50-day exponential moving average (EMA) which is placed at 14,634. It also closed above the weekly 10-period EMA which is placed at 14,631.
In the derivatives segment, we have seen Put writing at 14,400-14,500 and these levels will act as strong support going forward.
We believe that Nifty is in the strong support range of 14,400-14,600 and any correction from hereon should be utilised to accumulate long positions with the stop loss of 14,400.
On the higher side, Nifty is likely to find immediate resistance in the range of 14,700-14,750 where 5, 10 and 20-day exponential moving averages are placed. It could aim for 14,883-15,000 if it closes above 14,750.
Nifty Midcap and Smallcap indices have outperformed during the first two days of April. We expect their outperformance to continue in the coming weeks also.
The focus of the traders should be on mid and small-caps rather than benchmark indices.
Here are three 'buy' recommendations for the next 3-4 weeks:
Gujarat Fluorochemicals | LTP: Rs 607.50 | Target price: Rs 680 | Stop loss: Rs 570 | Upside: 12%
After breaking out from the downward slopping trendline on April 1 with rise in volumes, it witnessed sideways movement yesterday.
The short-term trend of the stock is positive as it is trading above its 5 and 20-day EMA.
Plus DI is placed above the minus DI while the ADX is upward slopping, indicating strength in the current uptrend.
It has formed a strong base by taking support at 200-day EMA in the last few months.
Laurus Labs | LTP: Rs 374 | Target price: Rs 410 | Stop loss: Rs 355 | Upside: 10%
This stock has broken out on the daily chart where it surpassed the crucial resistance of Rs 370 to close at the highest level since February 12, 2021.
Volumes were sharply higher compared to the last 10-day average volumes. Oscillators like RSI and MFI are showing strength in the stock.
Plus DI is placed above the minus DI, indicating strength in the current uptrend.
Mastek | LTP: Rs 1,318 | Target price: Rs 1,420 | Stop loss: Rs 1,250 | Upside: 8%
This stock has broken out on the daily chart with higher volumes and it closed at the highest level since January 14, 2021.
Plus DI has crossed minus DI while the ADX is upward slopping, indicating the stock is expected to gather momentum in the coming days.
Oscillators like RSI and MFI are showing strength in the current uptrend of the stock. Technology as a sector is looking good on the charts.
(The author is a technical research analyst at HDFC Securities)
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