A close above 12,034 in the Nifty and 31,300 in the Bank Nifty would negate the chances of a bearish reversal.
Last week, the Nifty ended with “Doji” candlestick pattern on the weekly charts. This development could act as a speed-breaker in the Nifty for the time being.
The Nifty50 closed below its five-day EMA for the first time after October 10, and the RSI indicator on the daily charts has just exited from the overbought zone. This development also indicates the chances of extension of the correction which started on November 8.
The Nifty50 formed a top at 12,034 last week, and the same would remain a crucial resistance in the short term. Unless this level is taken out, the short-term trend would be a running correction.
However, we strongly believe that the positional technical setup of Nifty is bullish, and the market would find support at lower levels.
According to estimates, 11,700 is a strong support, and the range of 11,700-11,750 should be utilized to create fresh long positions.
However, we should also keep an eye on the immediate support placed at 11,850 in the Nifty. If 11,850 is breached, we can see the Nifty to extend the correction towards 11,700-11,750.
As far as Bank Nifty is concerned, it has been outperforming in the recent past and has surpassed the highs which was registered on November 8.
Bank Nifty has got a strong trend line resistance at around 31,300 levels. Any level above that would bring momentum buying.
Before the 11,700-11,750 support zone, the level of 11,850 is likely to act as an immediate support for the Nifty. Now, a close below 11,850 could extend the fall towards 11,700-11,750 zone.
Momentum Indicators like MACD and DMI are holding their bullish setup on the weekly charts. To conclude, we believe that markets have entered the 'wait and watch' mode as far as the short term trend is concerned.
A close above 12,034 in the Nifty and 31,300 in the Bank Nifty would negate the chances of a bearish reversal. If Nifty breaks 11,850 in the short term, it would be advisable to wait for 11,700-11,750 to initiate fresh longs. We maintain our positional bullish stance on Nifty with 12,300 Targets.
Here is a list of top three stocks which could give 11-17 percent return in the next three-four weeks:
AU Small Finance Bank: Buy | LTP: Rs 718 | Target: Rs 796 | Stop-Loss: Rs 653 | Upside 11 percent
The stock price has registered a new 52-week high with a significant jump in volumes. Multiple resistance levels were placed around Rs 715 which has been taken out decisively on a closing basis.
A bullish “Flag” pattern breakout was registered on the week ended on October 27. The stock has been forming higher tops and higher bottoms on the daily as well as weekly charts.
Considering the technical evidence discussed above, we recommend buying the stock at the current market price for a target of Rs 796 and keep a stop loss below Rs 653 on a closing basis.
Maharashtra Scooters: Buy | LTP: Rs 4,787| Target: Rs 5,600 | Stop-Loss: Rs 4,410 | Upside 17 percent
The stock price registered a new all-time high placed at Rs 4,923 levels with higher volumes. It has surpassed the crucial double-top resistance placed around Rs 4,747 levels on the weekly charts.
The stock has been forming higher tops and higher bottoms on the weekly as well as monthly charts. Oscillators and Indicators like MACD and ADX have turned bullish on weekly charts.
The stock price is placed above all the important moving averages, which indicates a bullish setup on all time frames.
Considering the technical evidence discussed above, we recommend buying the stock at CMP for the target of Rs 5,600 and keep a stop loss below Rs 4,410 on closing basis.
Bajaj Holdings: Buy | LTP: Rs 3,706 | Target Rs 4,250 | Stop-Loss: Rs 3,450 | Upside 15 percent
The stock price registered a new all-time high at Rs 3,850 with higher volumes. The stock recorded a Triple Top breakout above Rs 3,760 odd levels on the weekly charts.
The stock has been forming higher tops and higher bottoms on the weekly and monthly charts. Oscillators and Indicators like MACD and ADX have turned bullish on weekly charts.
The stock price is placed above all important moving averages, indicating a bullish time frame on all time frames.
Bajaj group stocks have been performing very well for the last many months and the same could lead to the gains in their holding company Bajaj Holding as well.
Considering the technical evidence discussed above, we recommend buying the stock at CMP, for the target of Rs 4,250, and keep a stop loss below Rs 3,450 on a closing basis.
(The author is Technical and Derivative Analyst at HDFC Securities)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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