The Nifty recorded a running correction of 428 points from its all-time high of 19,991 to the recent low of 19,563. On the last day of July, the index found support on its 20-day SMA (simple moving average - 19,598) and bounced back. In July alone, it added 2.94 percent from the ongoing rally, which started in March 2023. The Nifty has risen for the fifth month on the trot.
From the bottom of March 2023 (16,828), the index has registered a rally of 18.8 percent, while NSE Smallcap index has surged 35 percent in the same period. However, the Nifty Smallcap index is yet to register an all-time high of 12,047 made in January 2022. Outperformance of smallcap stocks in the recent rally has continued on last session of July, as the Smallcap index was almost 0.88 percent up against 0.55 percent gain of Nifty.
More than 80 percent of NSE500 stocks are placed above their 200 DMA, which is a healthy sign as far as breadth of the market is concerned. At the same time, this number is not yet too high to consider it to be overbought. So, we can say that, there is still enough steam left in the stocks to extend this rally.
Primary trend of the Nifty is bullish, as it has been holding above 20, 50 and 100 DMAs. Higher tops and higher bottoms formation is also intact on Nifty daily and weekly charts. At present, it is in formation of a flag pattern on the daily chart. Bullish breakout from this pattern would be confirmed above 19,868 hurdle. A level above 19,868 would push the benchmark towards a new all-time high where we can expect the target of 20,400.
Existing long positions should be held with the stop-loss of 19,500 in the Nifty where change of polarity level comes in to play. For the short term, sectors like Metal, PSU banks and Power are likely to perform well. NSE Smallcap Index is in full momentum and we expect it to register new all-time high above 12,047 and go beyond in the near term.
Here are three buy calls for next 2-3 weeks:
Kalyani Steels: Buy | LTP: Rs 423.7 | Stop-Loss: Rs 387 | Targets: Rs 468-510 | Return: 20 percent
KSL has surpassed the previous top resistance of Rs 392 on the weekly charts. The stock has recently caught the momentum along with jump in volumes.
Metal sector has started outperforming and the same is expected to continue. Indicators and oscillators have turned bullish on the weekly charts.
The stock price has been holding higher tops and higher bottoms on weekly and monthly chart.
Voltamp Transformers: Buy | LTP: Rs 4,630.7 | Stop-Loss: Rs 4,316 | Targets: Rs 5,000-5,290 | Return: 14 percent
The stock price has broken out from bullish “Flag” pattern on the daily charts. Primary trend of the stock is bullish as it has been holding its level above all important moving averages.
Indicators and oscillators have been showing strength in the current uptrend. Volumes have been rising along with the price rise. The stock price has resumed its uptrend after taking support on its previous top on the daily chart.
Bank of India: Buy | LTP: Rs 85.35 | Stop-Loss: Rs. 81.50 | Targets: Rs 92-96 | Return: 12.5 percent
The stock price has been forming higher top and higher bottom formation on the daily chart. The stock is placed above all important moving averages, which indicates bullish trend on all time frames.
PSU banking sector looks strong on the chart and same is expected to continue. After few days of consolidation, stock seems to have resumed primary uptrend.
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