The size of the daily candles for the last couple of days has been shrinking, which indicates a sideways consolidation phase for the Nifty.
The index is closely trading above its 21-day exponential moving average on the daily interval. Maximum Call open interest (OI) is seen at 16,800 strike which will be a crucial level for this expiry.
On the downside, massive OI addition is visible at 16,500-16,600 strikes.
For the last couple of trading sessions, market breadth has been in the favour of the bulls.
In terms of ratio, for every two positive closings, there is one negative closing.
We have also spotted a bullish hidden divergence in the RSI (14) wherein prices did not register a new intermediate low but the RSI (Relative Strength Index) formed a new low near 65-level on the daily interval.
The immediate support for the Nifty is placed near 16,400 level and resistance is pegged near 16,900 level.
Bank Nifty has made multiple attempts to break the resistance levels placed at 36,300–36,400 levels. But it has been unable to breach the upper band of the horizontal trendline on a daily scale.
The immediate support for the Bank Nifty is placed near 34,600 and resistance is pegged near 36,300.
Here are two buy calls for the next 2-3 weeks:
HDFC Bank | LTP: Rs 1,555.25 | Target price: Rs 1,650 | Stop loss: Rs 1,510 | Upside: 6%
This stock has been trading in a symmetrical triangle formation for the last four months and has formed a trendline resistance at Rs 1,530.
It broke out of a symmetrical triangle pattern at Rs 1,558 on August 24 and registered a decisive breakout that suggests a change in the trend from sideways to upside.
It is trading above its 21, 50 and 100- day exponential moving averages on the daily timeframe, which is positive for the near term.
The MACD indicator is reading above its centerline with a positive crossover above its signal line.
Momentum oscillator RSI (14) is reading above 60 level which indicates positive momentum may continue going ahead.
Aurobindo Pharma | LTP: Rs 695.55 | Target price: Rs 760 | Stop loss: Rs 665 | Upside: 9%
Momentum oscillator RSI (14) has reached near extremely oversold level (10) and a sharp bounce back from the current level cannot be ruled out.
Volume activity has increased significantly in the last few trading sessions which indicates accumulation in the oversold conditions.
(The author is a Technical Analyst at Bonanza Portfolio)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.