Nifty has been forming higher highs and testing new highs for the last 12 weeks.
On January 21, the index moved higher and broke above the 14,700 mark. The rally that we are witnessing seems broad-based as it is supported by the Nifty Midcap, Smallcap and the Nifty Bank which now seems to be moving in sync with the Nifty.
On the open interest front, the highest participation is seen at 15,200 calls which have seen the addition of open interest.
On the put side, the 14,000 put contracts have the highest open interest. So, we can expect the range of the broader index to be 15,200-14,000 in the medium-term.
On the indicator front, the index remains above the 20, 100, and 200-day simple moving averages.
The ADX is moving higher as the index tests fresh lifetime highs and it points towards the strength in the uptrend.
Based on the above parameters, we can conclude that the medium-term trend of the index remains bullish and we expect the index to move higher and test fresh lifetime highs.
However, in the short-term, we might see a mild correction. From a medium-term perspective, we expect the index to move higher and test the 15,056 level which is 100 percent of the rise from 7,511 to 11,794, projected from 10,790.
After the level of 15,056, Nifty may rise to 15,368 which is 100 percent of the rise from 11,535 to 13,777, projected from 13,131.
The key support level for Nifty is now placed at the 14,200 mark.
Here are two buy calls for the next 2-3 weeks:
Havells India | LTP: Rs 1,131.20 | Target price: Rs 1,267 | Stop loss: Rs 1,040 | Upside: 12%
Havells was facing strong rejection near Rs 1,040 mark and was unable to move above this level in the last eight sessions.
On January 21, however, the stock took out the Rs 1,040 mark with a gap. This breakout was backed by above-average volume, which was the highest in the last four years.
The ADX plotted on multiple timeframes can be seen rising as the stock moves higher, indicating strength in the up-move in the short and medium-term.
The RSI, too, can be seen rising on multiple time scales which points towards the expanding momentum in both the medium and the short-term.
Based on the above parameters, we believe that the stock is in a strong bull phase.
We expect this breakout to sustain and take the stock higher towards Rs 1,267 (161 percent extension level of the rise from Rs 447 to Rs 855 projected from Rs 796), followed by Rs 1,458 (161 percent extension level of the rise from Rs 857 Rs 1,041, projected from Rs 969.
On the downside, the key support level is placed at Rs 1,040 (breakout level). One can buy this stock at the current level with a target of Rs 1,267 beyond which we might expect the prices to test Rs 1,458 level with a strict stop loss of Rs 1,040 on a closing basis.
Balkrishna Industries | LTP: Rs 1,700.60 | Target price: Rs : 1,840 | Stop loss: Rs 1,600 | Upside: 8%
This stock seems to be resuming its up-move after correcting 50 percent of the previous up-move from Rs 1,300 to Rs 1,720.
On January 21, this stock managed to open and sustain above Rs 1,686 level which was high of the high-volume candle.
This up-move was backed by rising volume. On the indicator front, the MACD plotted on multiple timeframes can be seen placed above the zero line, indicating that the stock is in an up-move trend.
Similarly, RSI plotted on multiple timeframes has been consistently rising, indicating the presence of momentum in the bullish trend.
Going ahead, the key levels to watch out for on the upside are Rs 1,840 (78.6 percent extension level of the rise from Rs 1,306 to Rs 1,720, projected from Rs 1,515), followed by Rs 1,930 (100 percent extension level of the rise from Rs 1,306 to Rs 1,720, projected from Rs 1,515.
The red flag level for the counter is Rs 1,600. One can buy the stock at the current levels with a target of Rs 1,840 and a strict stop loss of Rs 1,600.
(The author is a technical analyst at GEPL Capital)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.