The Nifty50 on the daily time frame is trading within a downward tilt channel pattern. On April 29, prices witnessed a stiff resistance at the upper band of the channel pattern and slip almost 600 points post facing the resistance.
On Wednesday, May 5, Indian equity benchmarks made an optimistic start, led by buying in pharma and telecom stocks. In the second half of the trading session, Nifty continued to trade in fine contour on continued buying by funds and retail investors as RBI Governor unveiled liquidity support measures amid rising COVID-19 cases in India.
Indian bourses on the daily chart are trading above their 100-day exponential moving average which is placed above the lower band of the channel pattern acting as a crucial support zone for the index.
The index has broken out its Rising channel pattern on the weekly chart. After trading within the rising channel pattern for more than 12 months, the index registered a decisive breakdown that suggests if prices continued to trade below their trend line resistance then there will be a change in the trend from upward to negative.
Currently, Nifty Pharma Index is outperforming the Benchmark index and the Pharma index has broken out its Pole flag pattern on the weekly chart.
After consolidating for more than 10 weeks in a flag pattern, the pharma index registered a decisive breakout that suggests a change in the trend from sideways to upward.
The Nifty50 index is holding the key support zone, but the chart pattern suggests that there might be some action expected in the index if the price remains above the support zone or breaks the crucial resistance zone which rests at 14,900 levels in the coming trading sessions. Support for the index is placed near 14,245 levels which are clubbed with a 100-DEMA.
Here is a list of stock recommendations for the next 3-4 weeks:
SBI: Buy| LTP: Rs. 355| Target: Rs 380|Stop Loss Rs. 340|Upside 7%
The stock has been trading in a falling channel pattern for the past two months and it has also followed lower bottom, lower high formation on the daily chart.
SBI has given a decisive break out of a falling channel pattern and currently hovering above the upper band of the falling channel pattern on the daily interval.
The stock is trading above its 100-day exponential moving averages on the daily time frame, which is positive for the prices in the near term.
When we observe volume activity there has been above-average volume set up for the past few days. Momentum oscillator RSI (14) has given a horizontal trend line breakout which was placed at 42 levels.
Currently, RSI is reading near 50 levels with a bullish crossover, which indicates bullish momentum will likely to continue in the near term.
Divi’s Laboratories: Buy| LTP: Rs. 4035| Target: Rs 4320|Stop Loss Rs. 3875|Upside 7%
The stock has broken out of its smaller degree symmetrical pattern at 3821.85 levels on 12 April 2021 after consolidating for more than three months in a symmetrical pattern.
The price registered a decisive break out of the said pattern that suggests a change in the trend from sideways to upward.
Besides, the price is trading above its 21-period EMA, which is acting as a crucial support zone below the upper band of the triangle pattern.
The momentum oscillator RSI (14-period) is trading above 60 levels, indicating a positive trend for the stock.
MACD is also showing a positive crossover and sustaining above the centerline, further indicates an upside direction for the stock.
The Parabolic SAR indicator is below the current market prices and acting as short-term support for the stock at the lower band of the pattern.
Divi’s Laboratories price seems to be in a positive phase based on the above technical outlook and approaching the key resistance zone.
The chart pattern suggests that there might be more action expected in Divi’s Laboratories if the price breaks the important resistance levels in the coming weeks.
Glenmark: Buy| LTP: Rs 573| Target: Rs 613|Stop Loss: Rs 550|Upside 7%
Glenmark has moved up after consolidation on the weekly time frame suggesting a rise in optimism among the investors.
The stock has also witnessed a breakout of a symmetrical pattern on the daily scale. Prices have witnessed a spectacular rally in the last four weeks leading to an almost 30 percent gain.
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 its exponential moving averages (50 & 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 with positive sentiments.
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