Nandish Shah, Senior Derivative & Technical Analyst at HDFC Securities
The Nifty broke the six-day losing streak on Monday, when it rose 60 points to close at 15,842 levels. After a lower opening, the benchmark index recovered during the day led by banking and realty stocks.
The Nifty made triple bottom around 15,735 levels and formed higher low as compared to 15,671 low made in March 2022. It formed Doji candlestick pattern on Monday which indicates indecisiveness. If the Nifty closes above Doji candle stick pattern's high of 15,978, the level which coincides with the 5 days EMA (exponential moving average) also, it would be considered as a bullish short term trend reversal.
First sign of short covering is seen by FIIs in the Index futures segment on last Friday where their long to short ratio has increased to 0.31 levels from 0.20 levels. On the other hand, client's long to short ratio has fallen to 1.43 levels, lowest in a month, which augurs well for the markets.
Therefore we believe that if Nifty manages to close above 15,980 levels, we may see Nifty extending it gains towards to 16,300 levels. Below 15,700, Nifty could move down towards the next support of 15,400, which happens to be 20 months EMA.
Nifty Midcap and Smallcap indices outperformed by rising over 1 percent on Monday. After a sharp fall during last few weeks, we expect midcap and smallcap stocks to do well in the coming weeks.
Here are three buy calls for next 2-3 weeks:
Lemon Tree Hotels: Buy | LTP: Rs 63 | Stop-Loss: Rs 59 | Target: Rs 70 | Return: 11 percent
The stock price has broken out on the daily chart where it closes at highest level in last five days with higher volumes. Short term trend turned bullish as stock prices closed above its 5 and 20 days EMA.
RSI (relative strength index) Oscillator is sloping upwards and placed above 50, indicating strength in the current uptrend of the stock.
Bharat Electronics: Buy | LTP: Rs 226.85 | Stop-Loss: Rs 215 | Target: Rs 245 | Return: 8 percent
Short term trend of the stock turned bullish as it closed above its 5 days EMA, first time after April 26, 2022. Primary trend of the stock is positive as it is trading above its 100 and 200 days EMA.
Stock price has corrected nearly 15 percent from the recent high and reached near upward sloping trendline support on the weekly chart. RSI and MFI (money flow index) oscillator has started rising, suggesting strength in the stock.
ICICI Securities: Buy | LTP: Rs 487 | Stop-Loss: Rs 460 | Target: Rs 550 | Return: 13 percent
Short term trend of the stock turned bullish as it closed above its 5 days EMA, first time after April 20 this year, with higher volumes. Momentum oscillators like RSI and MFI have exited from the oversold zone and started rising, suggesting higher possibility of bullish trend reversal in stock price in the coming days.
Considering the technical indicators discussed above, stock price has corrected nearly 25 percent from the recent high which we believe is a buying opportunity for the short term.
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