The Nifty continued its southward journey for the second straight day, despite strong global cues. At close on February 20, the index was down 100 points at 17,845. From the recent swing high of 18,134, it has suffered a correction of more than 300 points in three trading sessions.
Positional trend of the Nifty remains positive as it trades above the 200-day EMA (exponential moving average). The formation of long lower shadows in the last few daily candles around 200-day EMA (currently placed at 17,590) indicates strong base for the Nifty around that level which is unlikely to be broken on the downside soon.
Among the Nifty options, Puts are being written at 17,600-17,800 levels. FIIs long to short ratio in the Index Future is placed at an oversold levels of 0.30 which in-turn indicates there is a higher probability of short covering by them from hereon.
Therefore, on the downside, 17,600 could now be considered as an immediate support for the Nifty and one should remain bullish with stop-loss of 17,600 levels.
On the upside, 18,000-18,135 could act as an immediate resistance for the Nifty. We may see some upside momentum once the benchmark manages to surpass a swing high of 18,135 convincingly.
The broader market indices like midcap and small caps are still in a rangebound action. The overall positive chart pattern signal strengthening of upside momentum in these indices ahead. The present consolidation could be a buy on dips opportunity for the mid and small cap stocks.
Here are three buy calls for the next 3-4 weeks:
S Chand and Company: Buy | LTP: Rs 181 | Stop-Loss: Rs 168 | Target: Rs 195-204 | Return: 13 percent
The stock price has broken out from the downward sloping trendline, adjoining the highs of December 5, 2022 and January 3, 2023. Short term trend of the stock is positive as stock price is trading above its 5 and 20-day EMA.
Momentum Oscillators - RSI (relative strength index - 11) and MFI (money flow index - 10) is sloping upwards and placed above 50 on the daily chart, indicating relative strength in the stock.
Control Print: Buy | LTP: Rs 463 | Stop-Loss: Rs 430 | Target: Rs 500-520 | Return: 12 percent
The stock price has broken out on the weekly chart from the downward sloping trendline, adjoining the weekly highs of August 26, 2022 and December 16, 2022.
Primary trend of the stock is positive as stock price is trading above its 100 and 200-day EMA. Momentum Oscillators - RSI (11) and MFI(10) is sloping upwards and placed above 50 on the weekly chart, indicating strength in the stock.
Indraprastha Gas: Buy | LTP: Rs 436 | Stop-Loss: Rs 420 | Target: Rs 458-471 | Return: 8 percent
The stock price has broken out on the weekly chart from the downward sloping trendline, adjoining the weekly highs of September 17, 2021, December 2, 2022 and December 23, 2022.
The stock price has been forming bullish higher top higher bottom on the weekly chart. Momentum indicators and oscillators are showing strength in the stock.
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