The Nifty ended 257 points lower at 16,983 on October 11 to form a Bearish Engulfing pattern on daily charts as it broke the previous day's low of 17,050.
Now 16,975 is the susceptible level because it lies on 200-day simple moving average. If the Nifty slips below 16,975, the next critical support will be 16,800-16,700 at 100-DMA. On the upside, 17,450 is the immediate hurdle and then 17,600.
The Bank Nifty has a critical resistance in the 39,200-39,300 area, where it may see some weakness. If it manages to take out this zone, we can expect a short-covering rally towards 39,500-39,600.
On the downside, 38,500 is the critical support for the banking index. Below it, 37,930 is the next support in the near term.
Foreign institutional investor flow will play an important role as FIIs are selling aggressively, while domestic institutional investors try to support the market amid strength in the dollar index. The direction of global markets, along with currency markets, will be the other important factor.
Here are three buy calls for the next two-three weeks:
Kalpataru Power Transmission: Buy | LTP: Rs 448 | Stop-Loss: Rs 397 | Target: Rs 554 | return: 24 percent
The counter is in a classical uptrend and is breaking out of ascending triangle formation on the daily chart. The breakout coincides with rising volume and sustains above the breakout level.
It is trading above all important moving averages with a positive bias in momentum indicators. On the downside, a cluster of moving averages around Rs 400 will act as a strong support.
LT Foods: Buy | LTP: Rs 122.40 | Stop-Loss: Rs 105 | Target: Rs 150 | Return: 22 percent
The counter is in a classical uptrend and witnessed a multi-year breakout on the longer time frame. It is travelling in an uptrend channel formation pattern on the daily chart to continue this momentum for further upside where the previous swing high of Rs 125 is the hurdle, above which, we can expect Rs 150 level in the near term.
On the downside, the previous breakout level of Rs 112 is the immediate support, while Rs 105 is also a strong demand zone. Momentum indicators are positively poised to support the current strength in the trend.
Liberty Shoes: Buy | LTP: Rs 366.10 | Stop-Loss: Rs 327 | Target: Rs 434 | Return: 19 percent
The counter has witnessed a breakout of Bullish Flag formation on the daily chart. The overall structure is very lucrative, as the stock is trading above its important moving averages.
On the upside, Rs 390 is the immediate resistance, above which, the stock can rise to Rs 434 in the near term. On the downside, if it breaks Rs 340, Rs 327 will be the next critical level.
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