Nifty continued its northward journey for the second day in a row where it gained a whopping 177 points to close at 11,228.
Last week, Nifty took support at 200-day SMA and bounced back nearly 450 points during the first two trading sessions of the October series.
The short-term trend has turned bullish as Nifty surpassed its 5-day simple moving average for the first time after September 17 which is currently placed at 11,074.
In the Nifty Options segment, we have seen Put writing at 11,000 levels.
Therefore, there are multiple pieces of evidence that suggest that on the downside, Nifty is likely to find strong support in the range of 11,000-11,100 and unless the index closes below 11,000, this pullback rally may continue.
Immediate resistance is seen around 11,300 which is the 50 percent Fibonacci retracement level of the correction seen from the high of 11,800 to the low of 10,790 levels.
A close above 11,300 would give bulls full control as it would lead to a short-covering which might push Nifty to the next resistance level of 11,600.
Bank Nifty, which had been underperforming during the current uptrend, will outperform from here on we believe.
Bank Nifty has broken out from the downward sloping trendline on the daily line chart. One can remain bullish about the banking index with the stop loss of 21,000.
On the higher side, we expect Bank Nifty to reach 23,000 in days to come.
After witnessing a correction of nearly 10 percent from the August high, Nifty Mid and Smallcap indices resumed its uptrend where they surged 6 percent during the last two days.
We continue to believe that mid and small-caps, which have outperformed the benchmark index from the March lows till now, will continue their outperformance for the coming weeks and months also.
The focus of the traders should be on mid and small-caps that are likely to continue their outperformance for the coming weeks and months.
Here are three mid-cap buy recommendations for the next 3-4 weeks:
This stock has broken out on the daily charts with a surge in the volumes to close at a 52-week high.
Volumes have been higher during up days while lower during down days during the last couple of months, indicating accumulation is going on in the stock.
Oscillators and momentum indicators like RSI, MFI and MACD are showing strength in the current uptrend.
+DI is placed above the -DI while the ADX line is placed above 25, indicating momentum in the uptrend.
Strides Pharma Science | Buy | LTP: 704 | Target price: Rs 780 | Stop loss: Rs 670 | Upside: 11%
After witnessing a correction in the last few days, the stock price resumed its uptrend by closing above its 5-day SMA with a surge in volumes.
The primary trend of the stock is positive where the stock price is trading above all its important short-term and long-term moving averages.
The stock price is forming a bullish higher tops higher bottom on the daily chart.
Hikal | Buy | LTP: Rs 184.15 | Target price: Rs 205 | Stop loss: Rs 174 | Upside: 11%
After taking support at 20-day SMA during the last few days, the stock price resumed its uptrend by closing above its 5-day SMA with a surge in volumes.
Oscillators and momentum indicators like RSI, MFI and MACD are showing strength in the current uptrend.
The primary trend of the stock is positive where the stock price is trading above all its important short-term and long-term moving averages.
+DI is placed above the -DI indicating strength in the uptrend.
(The author is a technical research analyst at HDFC Securities)
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