By Vinay Rajani, CMT, senior technical and derivative analyst at HDFC Securities
The Nifty ended higher for the fifth straight session, after hitting an all-time high on the intraday charts. Nifty has registered a fresh all-time high of 22,186 and also closed above 22,100 for the first time. It has managed to surpass the crucial Double Top resistance placed near 22,125. Nifty seems to have broken out from the consolidation, which was there for the past 7 consecutive weeks.
The index has also broken out from the bullish Cup and Handle formation on the daily chart, which indicates continuation of an uptrend. Recent swing low of 21,530 becomes the floor for the Nifty in the short term and unless that is breached, dips should be utilised to create longs. Cup and handle pattern suggests an immediate target of 22,600-22,700 in the Nifty.
However, it would be advisable to take an approach of holding longs with trailing stop-loss instead of anticipating any upside target.
Bank Nifty, too, has been rising over the last five trading sessions and gradually improving its setup on the charts. An immediate hurdle for Bank Nifty is expected at 46,900, derived from the previous swing high.
Any level above 46,900 in spot Bank Nifty would bring back the lost momentum. The band of 45,600-45,700 could act as a support for Bank Nifty in the short term.
Here are three buy calls for the short term:
JK Lakshmi Cement: Buy | LTP: Rs 963 | Stop-Loss: Rs 880 | Target: Rs 1,120 | Return: 16 percent
The stock price has broken out from the consolidation, which held in the last three weeks. Price breakout is accompanied with jump in volumes. 50 DEMA (day exponential moving average) has been acting as a bullish reversal point for the stock for many weeks now.
Primary trend of the stock is bullish with higher tops and higher bottoms on the weekly charts. Cement stocks have been outperforming for the last couple of months.
Castrol India: Buy | LTP: Rs 212.70 | Stop-Loss: Rs 198 | Target: Rs 250 | Return: 17.5 percent
The stock price has shown a resilient move against the recent correction of the benchmark indices. It has been consolidating in the narrow range for the last five trading sessions.
The primary trend of the stock has been bullish with higher tops and higher bottoms on the weekly chart. The stock price is placed above all important moving averages, indicating bullish trend on all time frames.
Mastek: Buy | LTP: Rs 3,125 | Stop-Loss: Rs 2,900 | Target: Rs 3,400 | Return: 9 percent
The stock price has been forming higher tops and higher bottoms on the daily chart. It has been finding support on its 50-day EMA, currently placed at Rs 2,770. The stock has also been forming rounding bottom formation on the monthly chart.
The recent price rise has been accompanied by a jump in volumes. The share has surpassed the crucial double top resistance at around Rs 3,000.
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