By Nandish Shah
Led by banks, the Nifty 50 erased previous session losses and ended higher on April 29. At close, Nifty was up 1 percent or 223.5 points at 22,643. The Bank Nifty made a record high while the Nifty is about 120 points short so far from its record high.
The Nifty 50 formed a long bullish candle on April 29 negating the previous bearish pattern of Dark Cloud Cover formed on Friday. The short-term trend of Nifty turned bullish as the index closed above its 5, 11 and 20 DMA (days moving average). Nifty is also comfortably trading above a trendline connecting the recent swing lows of January and March 2024. Momentum indicators like the 14-day RSI (relative strength index), too, have recently bounced back from their previous lows, which is encouraging.
In derivatives there was aggressive Put writing at 22,300-22,400 levels. Moreover, 20 and 11-day EMA (exponential moving average) are placed at 22,379 and 22,425 respectively, suggesting on the downside 22,300-22,400 level would act as a very strong support. Therefore, traders are advised to accumulate longs with a stop-loss of 22,300 levels.
On the higher side, resistance for the Nifty is seen in the range of 22,700-22,775. The upside momentum is likely to accelerate once the all-time high of 22,775 is taken out.
The advance-decline ratio remained above one for the sixth day on the trot at 1.08 levels on the BSE suggesting strong breadth. Nifty Midcap and Smallcap indices have outperformed during April as against the benchmark indices. We expect their outperformance to continue for the short to medium term.
Here are three buy calls for the next 3-4 weeks:
Indian Overseas Bank: Buy | LTP: Rs 68.70 | Stop-Loss: Rs 63 | Target: Rs 74 / 78 | Return: 14 percent
The stock price has broken out on the daily chart where it closed at the highest level since March 5, 2024. Accumulation has been seen during the last three days where volumes were sharply higher as compared to the last few days.
The stock price has been making bullish higher top, higher bottom formation on the weekly chart. Momentum indicators and oscillators like MFI (money flow index) and RSI (relative strength index) are sloping upwards and placed above 60 on the daily chart, suggesting strength in the current bullish trend.
Indian Metals & Ferro Alloys: Buy | LTP: Rs 725 | Stop-Loss: Rs 670 | Target: Rs 785 / 820 | Return: 13 percent
The stock price has broken out from the upward sloping trendline, adjoining the swing highs of March-2017, August-2021 and December-2023. The primary trend of the stock has been bullish with higher tops and higher bottoms on the weekly and monthly charts.
Plus DI (directional indicator) is placed above minus DI while ADX (average directional index) line is placed above 25 on the monthly chart, indicating stock price is in the momentum phase. Metal as a sector is looking strong on the medium-term charts.
Tata Power Company: Buy | LTP: Rs 448 | Stop-Loss: Rs 425 | Target: Rs 475 / 495 | Return: 10 percent
The stock price has broken out from the consolidation held for the last 10 sessions by surpassing resistance of Rs 444. The price rise is accompanied by an increase in the volumes suggesting strength in the upmove.
Plus DI is placed above minus DI while ADX line is sloping upwards and placed above 25 on the daily chart, indicating stock price is in the momentum phase. Power as a sector is looking strong on the medium-term charts.
The writer is senior technical/derivative research analyst at HDFC Securities.
Disclaimer: The views and investment tips expressed by investment 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.
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