Rajesh Bhosale
The Nifty 50 ended last week just above 22,400, with a gain of 1.23 percent from the previous week's close. After being under pressure for most of April, the week ended April 26 favoured the bulls. Despite a steady climb through the week, profit-booking emerged near the all-time high levels on Friday, forming a `Dark Cloud Cover' pattern on the daily charts, suggesting potential hurdles at higher levels.
In the near term, prices may encounter challenges in the range of 22,600 - 22,800. While the major indices saw limited traction, the broader markets had a remarkable run, with the smallcap and midcap indices entering uncharted territory. Despite Friday's setback, the market mostly adopted a 'buy on dips' strategy, maintaining a bullish undertone.
Going ahead, immediate support is expected around last Thursday’s low of 22,300, which coincides with the 20EMA (20-day exponential moving average), followed by the pivotal support of the bullish gap around 22,200.
Traders are advised to monitor these levels and focus on buying on dips, while booking profits at higher levels. Additionally, a stock-centric approach is recommended.
Here are two buy calls for the short term:
Engineers India: Buy | LTP: Rs 237 | Stop-Loss: Rs 222 | Target: Rs 257 | Return: 8.4 percent
Following a rebound from a crucial 89EMA support level, the stock's prices have established a higher bottom and breached a significant resistance level, validating a bullish 'Inverse Head and Shoulders' pattern. This breakout is backed by robust bullish candlestick patterns and a substantial increase in trading volumes.
Moreover, the RSI Smoothened indicator has recently signalled a buy opportunity. Based on these technical indicators, we hold a strongly bullish outlook on this stock.
Hence, we recommend buying Engineers India around Rs 236-234, with a stop-loss of Rs 222, and target of Rs 257.
NLC India: Buy | LTP: Rs 250 | Stop-Loss: Rs 238 | Target: Rs 265 | Return: 6 percent
Over the past few months, prices remained in a narrow range, encountering resistance in the Rs 240-245 zone. However, they have now decisively surpassed this upper limit, confirming a breakout from the range.
On the broader weekly charts, prices have already been in an upward trend, albeit experiencing a recent corrective phase in terms of time. With this breakout, the momentum appears to have shifted back in favour of the bulls, signaling a resumption of the upward trend.
Furthermore, the increase in trading volume accompanying this breakout, along with strong candlestick patterns on the daily charts, reinforces this bullish sentiment. Prices are comfortably positioned above key moving averages, and oscillators are indicating positive momentum, further endorsing the buy recommendation.
Hence, we recommend buying NLC India around Rs 250-248, with a stop-loss of Rs 238 and target of Rs 265.
The author is a technical analyst at Angel One.
Disclaimer: The views and investment tips expressed by investment 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.
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