Nifty continued its northward journey for the fourth day on the trot in which it gained 124 points to close at yet another new all-time high level.
During this quarter, Nifty has gained 3,500 points or more than 23 percent with four trading days left. This is the highest quarterly gain since the quarter ending June 2009.
During last week, Nifty made a long-legged Doji candlestick bullish reversal pattern on the weekly chart.
This indicates the bulls have overpowered the bears and the intermediate uptrend is intact.
With intermediate and long-term momentum readings like the 14-week and 14-month RSI in rising mode and not showing any signs of negative divergence, we expect the intermediate uptrend to continue.
In the options segment, we have seen Put writing at 13,600 levels. This level also coincides with the 11-day EMA which is placed at 13,600 levels.
Therefore, we believe that the short-term trend will remain intact till the Nifty is trading above 13,600 levels.
While we remain open to further upsides, a short-term trend reversal would be confirmed only If the immediate low of 13,600 is broken.
On the higher side, Nifty may find an immediate resistance in the range of 14,000-14,200 where we have seen Call writing.
Bank Nifty has also broken out from the last few weeks' consolidations to close at the highest level since February 2020.
We believe that the intermediate trend of Nifty continues to be positive. One should remain bullish with the trailing stop loss of 13,600 levels.
For Bank Nifty, our advice is to remain bullish with the trailing stop loss of 30,200. Any close above the 31,200 level would result in further short-covering which might push Bank Nifty to even 32,000-32,500 levels.
Mid-caps are likely to outperform in the coming days.
Here are three buy recommendations for the next 2-3 weeks:
HEG | LTP: Rs 943.80 | Target price: Rs 1,030 | Stop loss: Rs 880 | Upside: 9%
The stock has broken out on the daily chart with higher volumes where the stock price has closed at the highest levels since June 11, 2020.
The short and medium-term trend of the stock is bullish as it is trading above its all-important short and long-term moving averages.
Volumes have been higher during the up days as compared to down days during the last one and half months, indicating accumulation in the stock.
Muthoot Finance | LTP: Rs 1,222.25 | Target price: Rs 1,320 | Stop loss: Rs 1,150 | Upside: 8%
After sideways movement for the last few days, the stock resumed its uptrend where it closed at a five-day high with higher volumes.
The short-term trend of the stock is bullish as it is trading above all important short-term moving averages.
RSI oscillator is showing strength in the stock. Plus DI has closed above the Minus DI, indicating strength in the current uptrend.
Maithan Alloys | LTP: Rs 562.65 | Target price: Rs 630 | Stop loss: Rs 520 | Upside: 12%
The stock has broken out from the downward sloping trendline, adjoining the highs of December 2 and December 14 on the daily chart with a surge in volumes.
The stock is taking support at 200-day EMA. Plus DI has crossed Minus DI while the ADX is placed above 25 level, indicating momentum in the current uptrend. Besides, the metal sector is looking good on the chart.
(The author is a technical research analyst at HDFC Securities)
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