Malay Thakkar, Technical Research Associate, GEPL Capital
The Nifty fell for the 3rd straight session facing strong selling pressure at higher levels and ended the session lower by about 1 percent on Thursday.
On January 20, the Nifty bounced off the 17,640 support cluster of 100-day SMA (17,633) and the December 13 breakout level (17,640) and also managed to defend the 20-day SMA (17,745) on closing basis.
On the open interest front, maximum open interest (for January monthly expiry) on Calls has been shifted lower to 18,000 strike as it would act as a major hurdle going ahead.
On the downside, the index has major support in the 17,550-17,650 zone.
The index has been witnessing massive selloff since January 18, dragging the index below the 18,000 mark. The Nifty is placed very close to the support zone and is also oversold on the shorter time frame. Thus, in the sessions to come, we might see the index consolidate between the 18,000 and 17,550.
Here are three buy calls for next 2-3 weeks:
SBI: Buy | LTP: Rs 511.40 | Stop-Loss: Rs 490 | Target: Rs 584 | Return: 14 percent
SBI, for the past four weeks, has been forming a higher high higher low pattern after the prices formed a V-shaped recovery near the Rs 440 mark. A simple bar chart analysis suggests that the prices are move higher after a correction.
On the indicator front, the RSI (relative strength index) plotted on the weekly chart can be seen placed above the 50 mark and is currently moving higher towards the overbought level, indicating increasing bullish momentum in the prices.
Going ahead, we expect the prices to move higher towards the Rs 540 mark immediately, after which we might see Rs 584 being tested. We recommend a stop-loss of Rs 490 on daily closing basis.
Tata Power Company: Buy | LTP: Rs 248.65 | Stop-Loss: Rs 230 | Target: Rs 310 | Return: 25 percent
Tata Power witnessed a sharp recovery after the stock tested a low of Rs 202, which is placed close to the 23.6 percent retracement level of the rise from Rs 51-267. A simple price action analysis will suggest that the prices are moving higher after a shallow correction.
On the weekly front, the RSI placed above the 50 mark and moving higher, indicating presence of bullish momentum in the prices.
Going ahead, we expect the prices to move higher towards the Rs 267 mark after which we might see a move towards Rs 285 and eventually towards Rs 310.
We recommend a strict stop-loss at Rs 230 on a daily closing basis.
GAIL: Buy | LTP: Rs 147.35 | Stop-Loss: Rs 135 | Target: Rs 170 | Return: 15 percent
GAIL has been moving in a range between Rs 125 and Rs 170 zone for the past one year. During the recent correction, the stock took support at Rs 125 and moved higher.
In the current week, the stock has moved above the cluster of 20-week SMA (Rs 144) and 50-week SMA (Rs 145).
The RSI indicator on weekly has formed a bullish hinge near the 40 mark and is moving higher confirming the uptrend.
Going ahead, we expect the prices to move higher towards Rs 162 mark followed by Rs 170 levels. We recommend a strict stop-loss at Rs 135 on daily closing basis.
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