The Nifty has completed its 13-day correction from the recent high of 9,878 and witnessed a sharp bounce from the lower support levels of 8,800 with a strong upmove across sectors.
The crossover of the short-term averages of 9,250 levels would give a confirmatory signal for the positive momentum to continue on the higher side.
With the extended weekend and derivatives expiry, we expect sharp volatility with respect to rollover movements in individual sectors and stocks.
We remain positive on select sectors like auto, pharma and large private banks as the risk-reward is in favour of longs and expect these sectors to outperform the broader markets.
Nifty Metals is showing some breakout from its congestion zone crossing its medium-term averages.
We remain positive on markets and any decline near 8,800-8,650 levels would be a good opportunity to add longs as they are the important support levels on multiple time frames and retracements.
Nifty 9000 PE has the highest OI of 33 lakh shares with fresh addition of 7 lakh shares in the trade on May 21 at an average price of Rs 90, so 8,920-8,950 will act as strong support for the next week.
Here are three buy calls for the next 3-4 weeks.
NMDC | Buy | LTP: Rs 74.40 | Target price: Rs 86 | Stop loss: Rs 68 | Upside: 15.6%
The stock has witnessed a breakout with strong volumes after a prolonged consolidation on daily and weekly time frames.
The sector is in positive momentum and the Relative Strength Index (RSI) crossing upwards from its average line gives a confirmation of a strong move.
Sun Pharma | Buy | LTP: Rs 467 | Target price: Rs 535 | Stop loss: Rs 425 | Upside: 14.6%
The stock has retraced from its long-term averages after a correction from the highs of Rs 505 in the last one month.
We believe it has completed its price and time-wise correction and now expect it to outperform from current levels over the next few weeks.
Voltas | Buy | LTP: Rs 460.55 | Target price: Rs 520 | Stop loss: Rs 425 | Upside: 13%
The stock formed a double bottom at sub Rs 430 with strong volumes and has good support at the 61.8 percent retracement of the move of (Rs 210-742) levels.
Its RSI has crossed upwards from its lower band of averages and we expect the stock to outperform from current levels.
The double-bottom support and oversold status on daily charts will help it witness a sharp upmove to achieve the higher band of averages.
(The author is Senior Research Analyst at Reliance Securities)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.