Nifty50 surged almost 1 percent to close at 17,691 on October 4. After forming 'Doji' candlestick pattern on October 1, Nifty registered a follow-up buying, which has resulted into candlestick pattern of 'Morning Star' on the daily chart. This pattern has bullish implication and could lead to resumption of an uptrend.
Nifty has managed to hold the higher tops and higher bottoms on the daily chart. Nifty has also been able to hold above the upward sloping trend line adjoining the lows of September 8, 13 and 21. Nifty found support at its 20-day EMA (exponential moving average), currently placed at 17,500-odd levels.
For the last couple of weeks, Indian markets have been outperforming the global peers by a good margin.
Nifty Smallcap and Midcap indices have registered fresh all-time highs. Breadth of the market has remained very strong in last couple of weeks. Strong breadth indicates the strength in the markets.
RSI (relative strength index) oscillator has recently registered lower top on the daily chart. Bearish Head and Shoulder pattern can be seen on the daily RSI, but unless we see price levels breaking down in Nifty, bearish trend reversal would not be confirmed. Nifty would confirm bearish trend reversal only below 17,400. On the higher side, the range of 17,900-18,000 would continue to remain as strong resistance.
From the sectors, PSU banks, metal and pharma indices have registered fresh breakouts on the short-term chart. Stocks from these sectors should be kept on radar for generating trading gains. Sectors like energy, PSE and realty are in continuation of an uptrend.
Considering the evidences discussed above, we believe that long in Nifty should be held with strict stop loss of 17,400. We could continue to see stock and sector-specific bullishness in the coming sessions. Any level above 18,000 in Nifty would push it further towards 18,500 levels in short term.
Here are three buy calls for next 2-3 weeks:
Gujarat Narmada Valley Fertilizers & Chemicals: Buy | LTP: Rs 448.85 | Stop Loss: Rs 420 | Target: Rs 515 | Return: 14.7 percent
The stock has broken out from the bullish 'Flag' pattern on the daily chart. The stock is on the verge of posting new all-time high above Rs 465.5. GNFC hit an all-time high of Rs 465.50 in October 2017. On October 4, it surged 5.56 percent with significant jump in volumes. Primary trend of the stock has been bullish as it has been holding above all important moving averages.
Gujarat State Fertilizers & Chemicals: Buy | LTP: Rs 134.45 | Stop Loss: Rs 125 | Target: Rs 155 | Return: 15.3 percent
The stock has broken out from the 'Pennant' pattern on the daily chart. Price breakout is accompanied with rising volumes. Stock has also broken out from the rounding bottom pattern on the daily chart. Chemical and fertilizer stocks have been outperforming for last couple of months and same is likely to continue for next weeks.
Stock is placed above its 20, 50 and 100 DMA (daily moving average). Indicator and Oscillator setup has been holding bullish on weekly charts. Short term moving averages are placed above medium to long term moving averages.
Tinplate Company of India: Buy | LTP: Rs 309.80 | Stop Loss: Rs 295 | Target: Rs 341 | Return: 10.1 percent
The stock has broken out from double top resistance of Rs 300 on closing basis. Price breakout is accompanied with rising volumes. Midcap metal stocks have been outperforming for last couple of weeks.
The stock is on the verge of registering new all-time high above Rs 322. Indicator and Oscillator setup has been showing bullish trend on the weekly charts. Short term moving averages are placed above medium term moving averages.
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