Nifty continued its upward journey for the third consecutive day and closed at yet another new high of 17,855.
The intermediate uptrend remains bullish as the Nifty continues to make higher tops and higher bottoms over the last several months.
The index has been trading above the rising 20 and 50-day exponential moving average (EMA) which gives further evidence of an uptrend.
The 14-month RSI at 80 is not extremely overbought and is below its previous highs seen in 2007 and 2014, which again suggests scope for more upside in the coming weeks and months.
Our intermediate upside targets for the Nifty are at 18,200 and 18,450.
In the Options segment, we have seen Put writing at 17,400-17,500 levels. During the last correction, Nifty found support around that level and bounced back. This level also coincides with the 20-day EMA which is currently placed at 17,400-odd levels.
Therefore, we believe that the short-term trend will remain intact till the Nifty trades above 17,400.
Bank Nifty has already broken out on the weekly chart by surpassing the previous resistance of the 36,134-level.
Bank Nifty is expected to move towards the next target of 38,800 and 39,500 levels in the coming weeks.
Longs should be protected with 17,400 stop loss in Nifty and 37,300 in the Bank Nifty.
We believe that there is further upside for mid and smallcap stocks and they may continue their outperformance in the coming weeks and months.
Here are three buy recommendations for the next 2-3 weeks:
Phillips Carbon Black | LTP: Rs 268.45 | Target price: Rs 300 | Stop loss: Rs 250 | Upside: 12%
This stock has broken out from the downward sloping trendline on the daily chart with higher volumes to close at the highest level since August 3, 2021.
Short term trend of the stock is positive where it is trading above its all-important short-term and medium-term moving averages.
Plus DI is placed above the minus DI while the ADX line has started slopping upwards, indicating the stock is likely to gather momentum in the coming days.
Daily RSI has shown trendline breakout which is a bullish development for the short term.
This stock has already broken out from the downward sloping trendline, adjoining the highs of July 19 and September 7, 2021.
The primary trend of the stock is positive as it is trading above its 20, 50- and 100-day EMA.
Plus DI is placed above the minus DI while the ADX line is placed above 20 and slopping upwards, indicating momentum in the current uptrend.
Daily RSI and MFI line witnessed trend line breakout, which is a bullish development for the short term.
Godrej Industries | LTP: Rs 577.45 | Target price: Rs 640 | Stop loss: Rs 538 | Upside: 11%
After taking support at its 100-day EMA multiple times, this stock reversed northwards to close above its 5 and 20-day EMA.
The primary trend of the stock is positive as it is trading above its 50, 100 and 200-day EMA. Daily RSI has already shown trend line breakout, which is a bullish development for the short term.
Accumulation is seen during the last few months where volumes are higher during the up days as compared to down days.
Once this accumulation is over, we are expecting the stock to witness a sharp up-move.
(The author is a technical research analyst at HDFC securities)
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