Bulls have been on the go, touching new highs in every session. Benchmark index Nifty on January 13 retraced to 14,440 levels but found support near 38.20 percent Fibonacci retracement from its previous intermediate low of 14,039 and witnessed a sharp recovery in the second half of the trading session.
India VIX rose 1.94 percent from 22.85 to 23.29 levels. Volatility is moving upwards because of rising Call implied volatility (IV) and now it needs to cool down below 20 zones to form the higher market base.
This week, prices have closed above the resistance of the upper band of the rising channel pattern on a weekly interval.
Daily RSI (14) has closed above the 80 levels which is an extremely overbought zone. Previously on December 18, 2020, when daily RSI reached near 80 levels, Nifty witnessed a sharp single-day fall in the next immediate trading session.
Now it has to continue to hold above 14,450 to witness a fresh move towards 14,750, while on the downside major support exists at 14,325 levels.
After four days of the minor consolidation, Bank Nifty witnessed a breakout of the range and registered its lifetime high in the initial trading hours.
Daily RSI (14) for Bank Nifty continues to settle above its bullish range-shift zone and is currently reading well above 70 levels with bullish crossover.
The banking index continues to trade higher as bulls don't want to lose their grip in the short-term.
Going forward, the trend in Bank Nifty may remain bullish. On the higher end, the rally may extend towards 33,500 levels. On the lower end, support is placed at 31,700.
Here are three buy calls for the short-term:
Power Grid Corporation of India | LTP: Rs 205 | Target price: Rs 226 | Stop loss: Rs 193 | Upside: 10%
This stock, on the weekly chart, has witnessed a symmetrical triangle breakout and is currently trading above its line of the polarity of the said pattern.
The previous week's strong green candle has almost engulfed its last six weeks' candle which can be called an extremely positive breakout.
Prices are above all major exponential moving averages which indicate that bulls are likely to keep charge in the upcoming sessions as well.
Momentum oscillator RSI (14) is reading in a higher bottom formation and is currently reading above 62 levels with positive crossover on the cards.
On the weekly chart, the MACD indicator has just rose above zero level with positive crossover.
Federal Bank | LTP: Rs 74.75 | Target price: Rs 82 | Stop loss: Rs 71 | Upside: 10%
On January 7, this stock finally managed to surpass the multiple resistance zones around Rs 72 –74, which eventually confirmed a trendline breakout on the weekly interval.
Since the breakout, the stock has been consolidating above its trendline support and is likely to have completed its throwback.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
Prices are trading above their exponential moving averages (50 and 100) on the weekly chart.
Momentum oscillator RSI (14) is reading above 60 levels with positive crossover, which is positive for the counter. The MACD indicator is reading above its line of polarity.
Aditya Birla Fashion and Retail | LTP: Rs 180.70 | Target price: Rs 195 | Stop loss: Rs 171 | Upside: 8%
After a prolonged consolidation, this stock has witnessed a rectangle pattern breakout on the daily interval.
This week, it has given a fresh breakout above the key resistance level of Rs 170.
Additionally, the stock has managed to close above its 50 and 100-day exponential moving averages on the daily chart which is placed above 165 levels.
Positive divergences on secondary oscillators with rising volumes also support the next up-move in the prices.
RSI (14) has also witnessed horizontal trendline breakout above 60 levels with bullish crossover on the daily timeframe.
(The author is a technical analyst at Bonanza Portfolio)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.