Vidnyan Sawant, AVP - Technical Research at GEPL Capital
On the monthly timeframe of Nifty Index, after experiencing three consecutive months of negative returns, the previous month has formed a Doji candlestick pattern. This suggests a sense of indecisiveness in the market following a four-month downtrend. The recent low of 16,828.35 in the Nifty aligns closely with the lows observed in September and October 2022, thereby making it a significant level of support to monitor going forward.
On the weekly timeframe, the Nifty has exhibited a notable price action development after a span of 17 weeks. Specifically, the index has closed above the prior week's high, forming a higher high and higher low pattern. This upward momentum was observed after a bounce from the 50 percent Fibonacci retracement level, which was calculated based on the prior advance from 15,183.40 in June 2022 to the high of 18,887.60 in December 2022.
On the daily time frame a classical breakout of the double bottom pattern can be witnessed around the same levels mentioned above. The breakout is confirmed as it is accompanied by a Gap. The 20-day SMA (simple moving average 17,216) have also been surpassed which acted as a variable resistance to the prices.
The index has a strong support at 17,312 (weekly low) followed by 17,100 (key support). While on the higher side the mark of 17,650 (key resistance) followed by 17,800 (swing high) are crucial levels to watch out for.
It is possible that if the index were to exceed 17,650, it could experience a positive upward momentum and potentially reach levels as high as 17,800. Conversely, if the index were to fall below 17,312, it may lose strength and experience a downward trend, potentially even falling as low as 17,100.
Here are three buy calls for next 2-3 weeks:
KEI Industries: Buy | LTP: Rs 1,744.35 | Stop-Loss: Rs 1,680 | Target: Rs 1,960 | Return: 12 percent
The ratio charts of KEI against benchmark index Nifty show a rising trend, indicating strong outperformance of the stock. The recent breakout of the Rectangle pattern confirms continuation of the prior uptrend.
The prices have sustained well above the 18 & 50-day EMA (exponential moving average), indicating the presence of an uptrend.
On both the weekly and daily timeframes, the stock price is above the 50 mark, indicating positive momentum.
Moving forward, we anticipate the stock price to rise to the level of Rs 1,960, with a recommended stop-loss of Rs 1,680 on a closing basis.
Larsen & Toubro: Buy | LTP: Rs 2,257.75 | Stop-Loss: Rs 2,140 | Target: Rs 2,500 | Return: 11 percent
L&T has demonstrated a notable uptrend. Despite experiencing a correction from mid-December 2022, the prices did not break supports and underwent a polarity change around Rs 2,080 level. This observation underscores the resilient nature of the stock's price movement during the correction phase.
The stock has recently shown a breakout of the Symmetrical Triangle pattern which indicates continuation of prior uptrend.
The prices have sustained well above its key moving averages of 50, 100 & 200-day EMA which confirms the presence of prior uptrend.
Additionally, the RSI (relative strength index) on the daily timeframe has shown a breakout too which reflect presence of strong momentum.
Going ahead we expect the prices to move higher till the level of Rs 2,500 where the stop-loss must be Rs 2,140 on the closing basis.
Varun Beverages: Buy | LTP: Rs 1,454 | Stop-Loss: Rs 1,390 | Target: Rs 1,650 | Return: 13 percent
The stock price of VBL is currently trading near its life-high which tells that the stock already is in strong momentum. The recent breakout of the Rounding Bottom pattern confirms continuation of the prior uptrend.
On the daily timeframe, the stock has been consistently trading near the upper Bollinger Band, indicating increased volatility. Additionally, the RSI on the Daily timeframe has shown a breakout too which reflect presence of strong momentum.
In conclusion, based on these technical indicators, it is anticipated that the stock will continue to rise towards Rs 1,650 level with a suggested stop-loss at Rs 1,390 on a closing basis.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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