Since the start of this week, the benchmark index Nifty has been volatile and we are witnessing a tug of war between bulls and bears.
On September 22, the market traded in a very narrow range without any directional bets and the index closed 15 points lower near its previous day’s close.
Nifty continues to trade within the rising channel pattern on the daily timeframe. On September 21, it took strong support near the lower band of the rising channel pattern and witnessed a smart recovery after hitting an intraday low below 17,350 in the first half of the trading session.
Momentum oscillators and indicators like RSI and MACD suggest the positive momentum may continue. The index is trading above its 21-day exponential moving average on the daily chart.
Since July 28, it has been trading in a higher top, higher bottom formation and any dip near its 21-day exponential moving average can be considered as an immediate buying zone.
India VIX indicates volatility in the options market. It has witnessed a sharp rise - from the low of 9.02 on September 16 to the high of 18 on September 21.
A sudden rise in India VIX indicates fear among the traders and we see a sudden rise in the Put options premium.
The immediate support for Nifty is near 17,300 which is the lower band of the pattern and resistance is capped at 17,800–17,850 which is the upper band of the pattern.
Here are two buy calls for the next 2-3 weeks:
Mahindra & Mahindra Financial Services | LTP: Rs 180.85 | Target price: Rs 200 | Stop loss: Rs 170 | Upside: 11%
This stock has been trading in a falling channel formation for the last two months and has formed a trendline resistance at Rs 170 level.
It broke out of a falling channel pattern at Rs 179.35 level on September 17 and the prices have registered a decisive breakout that suggests a change in the trend from sideways to upside.
It is trading above its 21, 50 and 100-day exponential moving averages on the daily timeframe, which is positive for the prices in the near term.
MACD is reading above its centerline with a positive crossover above its signal line. Momentum oscillator RSI (14) is reading above 65 level which indicates positive momentum will likely continue ahead.
Piramal Enterprises | LTP: Rs 2,638.10 | Target price: Rs 3,050 | Stop loss: Rs 2,800 | Upside: 16%
This stock registered its low of Rs 2,187.25 on July 2021 and witnessed a sharp reversal as it gave a return of 30 percent in just two months and made a high of Rs 2,858 on August 9.
After that, this counter consolidated in a falling wedge pattern on a daily scale.
It gave a falling wedge pattern breakout on September 22 after consolidating for a month.
It is trading above its 21, 50 and 100-day exponential moving averages on the daily timeframe which is positive for the stock in the near term.
This week, we have observed a fresh breakout in the prices after a prolonged consolidation phase.
A sudden spurt in volume, along with price breakout, suggests the trend is likely to remain in favour of bulls in the coming sessions.
(The author is a technical analyst at Bonanza Portfolio)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.