Profit-booking continued for the second straight session on July 24, with the Nifty shedding more than 100 points from its intraday high, and ending down 73 points or 0.37 percent at 19,672.
The Nifty had last week found resistance near 20,000 and reversed south on the back of a steep loss in the IT index. It closed below its 5-day EMA (exponential moving average) for the first time after July 7. However, the benchmark index is still holding above 20, 50 and 100 day EMAs, which indicate a bullish trend on all time frames.
The RSI (relative strength index) oscillator has come out from the overbought zone on the Nifty daily chart, which could trigger some downside in the Index. However, there is no negative divergence by the RSI, which could limit the downside.
On the derivatives side, we have seen aggressive Put writing at 19,400-19,500 levels, which coincides with 20-day EMA at 19,450 levels. Moreover, the previous resistance level of 19,500 will interchange its role as a support. Therefore, on the downside, 19,400-19,500 could now be considered as an immediate support for the Nifty.
Positional support for the Nifty is expected at 19,100, which happens to be the level derived from an upward sloping trend line, adjoining major swing tops of October 2021 (18,604) and December 2022 (18,887).
Positional trend of the Nifty would remain bullish till it trades above 19,100. There could be extension of the correction which started last Friday, but considering the overall bullish trend, any dips towards 19,400-19,500 levels should be utilized to go long with 19,100 stop-loss on closing basis.
Here are three buy calls for the next 3-4 weeks:
CARE Ratings: Buy | LTP: Rs 753 | Stop-Loss: Rs 700 | Targets: Rs 815-845 | Return: 12 percent
The stock price has broken out from the downward sloping trendline on the weekly chart with higher volumes. The stock price has been forming bullish higher top higher bottom formation on the weekly chart.
Plus DI (directional indicator) is trading above minus DI while ADX (average directional index) line is placed above 25, Indicating stock price is likely to gather momentum in the coming days.
Linde India: Buy | LTP: Rs 4,594 | Stop-Loss: Rs 4,350 | Targets: Rs 4,880-5,000 | Return: 9 percent
The stock price has broken out from the multiple top resistance on the weekly chart. The stock price has been forming bullish higher top higher bottom on the weekly chart.
Primary trend of the stock is positive as stock price is trading above its 50, 100 and 200 day EMA (exponential moving average). Momentum Oscillators like - RSI (relative strength index - 11) and MFI (money flow index - 10) are sloping upwards and placed above 60 on the daily chart, indicating strength in the current uptrend of the stock.
Indian Bank: Buy | LTP: Rs 335.90 | Stop-Loss: Rs 316 | Targets Rs 360-372 | Return: 11 percent
The stock price has broken out on the daily chart with higher volumes to close at highest level since September 2018. Primary and intermediate trend of the stock is positive as stock price is trading above its important moving averages.
PSU banks as a sector is showing strength on the short-term chart. RSI Oscillator (11) is sloping upwards and placed above 60 on the daily chart, indicating strength in the stock.
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