Nifty fell sharply on July 19 on the back of a sharp fall in the Asian markets and overnight weakness in the US markets.
From the intraday low, Nifty recovered more than 50 points to end the day with losses of 171 points at 15,752.
This is the biggest fall in the Nifty in percentage term since April 30, 2021.
In the last two months, Nifty has made multiple bottoms in the range of 15,500-15,700 levels.
On the derivative segment, we have seen Puts being written at 15,500, indicating this level will act as strong support going forward.
Though Nifty has witnessed a sharp correction, it remains in an intermediate uptrend as long as it is trading above the important support level of 15,500.
A short-term trend reversal would be confirmed only if the index closes below this level. For traders, our advice is to remain bullish and accumulate longs on declines with the stop loss of 15,500.
On the higher side, Nifty is likely to find immediate resistance at 15,882 and 15,960.
Nifty Smallcap index has broken out on the weekly and monthly charts.
We expect its outperformance to continue for the coming weeks also. Therefore, the focus of the traders should be on mid and smallcaps for higher returns rather than largecap stocks.
Here are three buy recommendations for the next 2-3 weeks:
Radico Khaitan | LTP: Rs 822 | Target price: Rs 950 | Stop loss: Rs 775 | Upside: 16%
This stock has broken out from the last one-month consolidation phase on the daily charts to close at an all-time high level.
Intermediate and long-term momentum readings like the 14-week and 14-month RSI are in rising mode and placed above 60.
Plus DI is trading above the minus DI while the ADX is placed above 25, indicating momentum in the current uptrend.
Ingersoll Rand India | LTP: Rs 1,032 | Target price: Rs 1,150 | Stop loss: Rs 965 | Upside: 11%
This stock has broken out on the daily chart by surpassing the previous resistance of Rs 1,010.
Volumes have been sharply higher on up-days as compared to down-days for the last few months. Oscillators like RSI and MFI are showing strength in the stock.
Plus DI is placed above the minus DI while the ADX line is placed above 25 on the daily charts, indicating momentum in the current uptrend.
Eris Lifesciences | LTP: Rs 760 | Target price: Rs 830 | Stop loss: Rs 730 | Upside: 9%
This stock has been forming bullish higher top higher bottom patterns on the weekly charts.
After breaking out on the weekly chart during the early part of July, it witnessed sideways movement.
The primary trend of the stock is positive where it is trading above its 20 and 50-day exponential moving average.
Plus DI is trading above the minus DI and the ADX is placed above 25.
(The author is a technical research analyst at HDFC Securities)
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