Nifty fell sharply in the morning trade on June 21 due to a fall in the Asian markets and overnight weakness in US markets.
However, from the intraday low, Nifty recovered 241 points to end the day with a gain of 63 points at 15,746.50.
On Friday, the benchmark index made a low of 15,450 and bounced back sharply. This support coincides with the previous all-time high level of 11,432 which will interchange its role as a support.
If we draw the upward slopping trendline, adjoining the lows of April 22 and May 14, support comes to around 15,450.
Therefore, even though Nifty fell sharply on Friday and during the early part of Monday, it has not violated important supports of 15,400-15,450 on a closing basis.
Nifty remains in an intermediate uptrend till it is trading above the important support level of 15,400.
While we remain open to further upsides, a short-term trend reversal would be confirmed only if the Nifty closes below 15,400.
For traders, our advice is to remain bullish and accumulate longs on declines with a stop loss of 15,400 on a closing basis.
On the higher side, Nifty is likely to find immediate resistance at 15,770 and 15,900 levels.
We continue to believe that sectors that are looking strongest on the medium to long-term charts and are expected to outperform in the coming weeks are IT, FMCG, pharma and metals.
Nifty Midcap and Smallcap 100 indices have witnessed some correction from their all-time high levels, but their primary trend remains positive.
Nifty Midcap and Smallcap indices have outperformed this calendar year by rising 28 percent and 36 percent, respectively, against a 13 percent rise in the Nifty.
We expect their outperformance to continue for the coming weeks also. Therefore, the focus of the traders should be on mid and smallcaps for higher returns.
Here are three buy recommendations from the mid and small-cap segments for the next 3-4 weeks:
Maithan Alloys | LTP: Rs 939.90 | Target price: Rs 1,130 | Stop loss: Rs 855 | Upside: 20%
This stock has broken out on the daily chart to close at the highest level since February 2018. Accumulation has been going on in the stock where volumes are higher on up days as compared to down days for the last few weeks.
Plus DI (Directional Indicator) is placed above the minus DI while the ADX line is placed above 25, indicating momentum in the current uptrend.
Rupa & Company | LTP: Rs 455.10 | Target price: 525 | Stop loss: Rs 425 | Upside: 15%
After a sharp up move during the fag-end of May and the first week of June, this stock has witnessed correction.
During this correction, it partially filled the gap formed on June 1 and bounced back.
The primary trend of the stock is positive where it is trading above its 20 and 50-day EMA.
As the intermediate and long-term momentum readings like the 14-week and 14-month RSI are in rising mode and placed above 60, we expect the uptrend to resume soon.
Mastek | LTP: Rs 2,149 | Target price: Rs 2,450 | Stop loss: Rs 2,000 | Upside: 14%
The stock has been forming bullish higher top higher bottom patterns on the daily and weekly charts.
On the weekly chart, it has broken out from the last six-week consolidation phase to close at an all-time high level.
As the intermediate and long-term momentum readings like the 14-week and 14-month RSI are in rising mode and placed above 60, we expect the uptrend to continue.
(The author is a technical research analyst at HDFC Securities)
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