Nifty50 fell sharply on Monday morning amid weak Asian markets, large FII selling, and increased restrictions in many states. However, from the intraday low, the Nifty50 recovered more than two hundred points to end the day with the gains of three points at 14,634 levels
Nifty50 closed above its 50-day EMA which is placed at 14,630 levels. It has also found support near 61.8% retracement of the entire upswing seen from 14,151 to 15,044.
Therefore, we believe that even though the Nifty fell sharply on Friday and Monday morning, it has not violated important support levels on a closing basis.
In the derivative segment, we have seen Puts being written at 14400-14500 levels, and the derivative data also indicates that 14,400-14,500 levels are likely to act as strong support going forward.
We believe that Nifty50 is near the strong support range of 14,400-14,600 level and any correction from hereon should be utilized to accumulate long positions with the stop loss of 14,400 levels.
On the higher side, Nifty50 is likely to find immediate resistance at 14855 and 15044 levels. We continue to believe that sectors that are looking strongest on medium to long-term charts and are expected to outperform in the coming weeks are Chemical, Pharma, and Metals.
The Nifty Smallcap-100 has broken out on the daily chart on Monday to close at a 3-Year high. The Nifty Midcaps and Small-cap Indices have outperformed during the CY21 by rising by 16% and 22% respectively as against a 4.7% rise in the Nifty.
We expect their outperformance to continue for the coming weeks also. Therefore, the focus of the traders should be on Midcaps/Small caps rather than benchmark Indices.
Here are three buy recommendations from the Midcap/Smallcap segment for the next 3-4 weeks:
NOCIL: Buy | LTP: Rs 194 | Target: Rs 234 | Stop-Loss: Rs 182 | Upside 20%
The stock price has already broken out from the downward slopping trendline adjoining the highs of 05 March 2021 and 08 April 2021.
It also surpassed the crucial resistance of Rs 189 levels on Monday with higher volumes to close at a 3-year high. Oscillator like RSI and MFI is showing strength in the current uptrend of the stock.
Therefore, we recommend buying Nocil at the current market price of Rs 194.7 for the target of Rs 234, and keep a stop loss at Rs 182.
S H Kelkar & Company: Buy | LTP: Rs 148 | Target: Rs 170 | Stop-Loss: Rs 135 | Upside 15%
The stock price has broken out on the daily chart with higher volumes where it closed at highest levels since June-2019. The short-term trend of the stock is positive where it is trading above its 5, 20, and 50-day EMA.
Plus, DI is placed above the Minus DI while the ADX line is placed above 25, Indicating momentum in the current uptrend.
RSI Oscillator is showing strength in the current uptrend of the stock. Therefore, we recommend buying S H Kelkar at CMP of Rs 148 for the target of Rs 170 and keep a Stop Loss below Rs 135.
Aegis Logistics: Buy | LTP: Rs 313 | Target: Rs 350 | Stop-Loss: Rs 295 | Upside 12%
After forming a double bottom around Rs 280 levels, the stock price reversed northwards on Monday to close above its 5-and 20-day EMA.
The primary trend of the stock is positive where it is trading above its 100 and 200-Day EMA. The stock price is forming a bullish higher top higher bottom candlestick pattern on the weekly and monthly chart.
Plus, DI is placed above the Minus DI while ADX line is moving upwards, indicating momentum in the current uptrend Therefore, we recommend buying Aegis at CMP of Rs 312.8 for the target of 350, keeping a Stop Loss below Rs 295.
(The author is a Technical Research Analyst, HDFC Securities)
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