Nifty moved up sharply on May 17 as sentiment improved on the back of falling coronavirus cases, as the daily new cases count fell to below 3 lakh after twenty-six days. Nifty posted highest single day gains since March 3 and ended the day higher by 245 points at 14,923 levels.
Nifty has broken out on the daily chart from the downward slopping trendline, adjoining the highs of April 29 and May 10, 2021. Short-term trend of Nifty has turned bullish as it also closed above its 5-and 20-day EMA, which is placed at 14,800 and 14,713, respectively. In the options segment, we have seen Put writing at 14,700 levels. This support level also coincides with the 20-day EMA. Therefore, we believe that bullish trend will remain intact till Nifty is trading above 14,700 levels.
On the higher side, Nifty is likely to find immediate resistance in the vicinity of 15,000-15,050 levels. Any close above 15,050 level could result into further buying which could push Nifty to even all-time high level of 15,400 levels.
Bank Nifty has broken out from the trading range where it surged over 1,300 points to close at 33,460 levels. This is the highest single day gains since Budget day i.e. February 1. Bank Nifty has also broken out from the downward slopping trendline, adjoining the highs of February 15, March 3, March 10, April 28 and May 10, 2021.
We expect Bank Nifty, which was underperforming till now, to outperform from hereon. On the upside, resistance is seen around 34,300 levels. Far resistance is seen around 35,000 levels.
Sectors which are looking strongest on the short-term charts and are expected to outperform in the coming weeks are banking, FMCG and metals.
Nifty Midcaps and Smallcap Indices have outperformed during the CY21 by rising 19 percent and 25 percent, respectively, as against 7 percent rise in Nifty. We expect their outperformance to continue for the coming weeks also.
Here is a list of three stocks from the midcap/smallcap segment for the next 3-4 weeks:
Ramco Industries: Buy | Target: Rs 315 | Stop Loss: Rs 260 | Return: 13 percent
The stock price has already broken out from the downward slopping trendline adjoining the highs of March 9 and April 9, 2021.
It also surpassed the crucial resistance of Rs 273-275 levels on April 30 with higher volumes. Stock price has been consolidating in a narrow range during the last few days which is a buying opportunity we believe. Therefore, we recommend buying Ramco Industries at current market price (CMP) of Rs 278 for the target of Rs 315, keeping a stop loss at Rs 260.
CARE Ratings: Buy | Target: Rs 600 | Stop Loss: Rs 490 | Return: 14 percent
The stock price formed bullish higher top, higher bottom candlestick pattern on the daily chart. Accumulation is going on in the stock where volumes are higher on up days as compared to down days.
Short-term trend of the stock is positive where it is trading above its 5, 20 and 50-day EMA. Plus, DI (directional index) is placed above the Minus DI while ADX (average directional index) line is placed above 25, indicating stock is likely to gather momentum in the coming days.
RSI Oscillator is showing strength in the current uptrend of the stock. Therefore, we recommend buying CARE Ratings at CMP of Rs 526.5, for the target of Rs 600, keeping a Stop Loss at Rs 490.
Time Technoplast: Buy | Target: Rs 95 | Stop Loss: Rs 70 | Return: 20 percent
The stock price has been forming bullish higher top higher bottom candle stick pattern on the daily and weekly chart since April 2020. Medium-term trend of the stock is positive where it is trading above its 50, 100 and 200 day EMA. During the last few months, the stock price has been taking support at 50 day EMA.
The stock price has corrected nearly 10 percent from the recent high and reached to a support level of Rs 79-80 level, which we think is a running correction in overall uptrend. Therefore, we recommend buying Time Technoplast at CMP of Rs 79 for the target of Rs 95, keeping a Stop Loss at Rs 70.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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