Nifty has been trading in a narrow range of 15,600 to 15,950 for almost two months
Last week, the index found support around its 50-day exponential moving average (EMA) and reversed north. At present, the 50-day EMA is placed at 15,581.
The daily ADX line for Nifty has reached below 9, which can be considered extremely low as compared to historical readings.
In this kind of setup, we can expect the ongoing consolidation to end soon.
The primary trend of the market is bullish as Nifty has been holding above its 50, 100 and 200-day moving averages. Nifty is less than a percent away from its all-time high of 15,962.
Though the market has been trading near the all-time high level, the moves in the largecaps have been very choppy in the last many weeks.
The choppiness is expected to be there unless Nifty surpasses the level of 16,000.
Midcap and smallcap stocks have resumed their outperformance after a small consolidation.
On the derivatives front, there has been continuous Put writing at 15,700 and 15,800 strikes, which indicates that longs in Nifty should be held with the stop loss of 15,700.
Any level above the recent swing high of 15,962 would push Nifty towards the next targets of 16,200-16,300.
Here are three buy calls for the next 2-3 weeks:
Jubilant Ingrevia | LTP: Rs 629.50 | Target price: Rs 749 | Stop loss: Rs 580 | Upside: 19%
On July 22, 2021, this stock broke out from the previous top resistance of Rs 612. It has ended the narrow consolidation which was there for the previous seven weeks.
Volumes during the breakout were significantly higher which has confirmed the bullish breakout.
Short-term moving averages are placed above medium to long-term moving averages. Indicators and oscillators have been showing strength in the current uptrend.
Jubilant Industries | LTP: Rs 384.50 | Target price: Rs 440 | Stop loss: Rs 350 | Upside: 14%
This stock has recently taken out the crucial resistance of the previous swing high of Rs 369 on a closing basis.
It has formed a bullish rounding pattern formation on weekly and monthly charts and is placed above medium to long-term moving averages, indicating bullish trends on all timeframes.
Indicators and oscillators on weekly and monthly charts have turned bullish.
Jk Cement | LTP: Rs 3,110 | Target price: Rs 3,420 | Stop loss: Rs 2,915 | Upside: 10%
This stock has formed a bullish Harami candlestick and an inside bar pattern on the daily chart, which indicates the possibility of bullish trend reversal after a correction from the recent swing high.
For the last nine trading sessions, it has been forming a flag pattern with low volumes. The primary trend of the stock has been bullish as the stock broke out from the previous swing highs with higher volumes at the starting of July.
It looks all set to resume its primary uptrend after breaking out from the flag pattern. Moreover, the cement sector is expected to continue its outperformance.
(The author is a technical research analyst at HDFC securities)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.