Vinay Rajani, CMT, Senior Technical & Derivative Analyst at HDFC Securities
Nifty has seen some profit booking in last two sessions. From the high of 18,887, Nifty has slightly come down and hit a low at 18,591 on December 5. This fall seems to be short lived, as Nifty has been holding its levels above all important moving averages and it is holding a formation of higher tops and higher bottoms on the daily charts.
RSI (relative strength index) oscillator on the daily chart has reached overbought zone, but there is no sign of negative divergence is seen on the chart. RSI can remain overbought along with price rise.
On the weekly charts ADX (average directional index) has crossed -DI (directional indicator) line on the upside, which indicates rising bullish momentum in the Nifty. Positional trend of the Nifty is bullish and every dips should be utilized to go long in the Index.
On a bigger time frame, Nifty has formed bullish Inverted Head and Shoulder pattern, which projects healthy upside for the Nifty in the medium to long term. Next targets for Nifty are likely at 19,274 and 19,962, which happens to be the 78.6 percent and 100 percent Fibonacci extension levels, if we consider major swings seen in last 6 months. As far as short term support is concerned, previous swing high placed at 18,442 is an important level to watch out for.
Ratio Chart Analysis of Nifty Smallcap versus Nifty, indicates that Smallcap Index can continue to outperform, as ratio reversed north from the long term horizontal line Support. Nifty Smallcap Index, which is still 16 percent down from its all-time high, can get the attention of the traders.
December has been the second best month in terms of performance of Smallcap Index. Since Inception (17 years), average return of Smallcap Index is more than 4 percent. Smallcap Index has yielded positively in 15 out of 17 years in December. Icing on the cake is, whenever, Smallcap Index gave positive return in November. The month of December also gave positive return after that every time. In November this year, Smallcap Index rose by 2.99 percent, which increases the probability of continuing its uptrend in December.
Here are three buy calls for next 2-3 weeks:
Strides Pharma Science: Buy | LTP: Rs 370 | Stop-Loss: Rs 350 | Target: Rs 400-425 | Return: 15 percent
The stock price has surpassed crucial resistance of its previous swing high and its 200-day EMA (exponential moving average). Price rise is accompanied with jump in volumes. Stock price has also broken out from bullish Inverted Head and Shoulder pattern on its daily charts.
Stock is placed above all important moving averages, indicating bullish trend on all time frames. Stock price has been forming higher tops and higher bottoms on daily chart.
Sunflag Iron & Steel: Buy | LTP: Rs 98 | Stop-Loss: Rs 92 | Target: Rs 107-115 | Return: 17 percent
The stock price has surpassed crucial resistance of its previous swing high, placed at Rs 95.75. Stock jumped more than 7 percent with rise in volumes on December 5, 2022.
Metal sector has started outperforming the Nifty and same is expected to continue. Indicators and oscillators have turned bullish on the weekly charts.
Hindustan Copper: Buy | LTP: Rs 121.45 | Stop-Loss: Rs 111 | Targets: Rs 135-144 | Return: 19 percent
The stock price has broken out from the downward sloping trend line on its weekly charts. Volumes have been gradually rising along with the price rise.
Metal sector has started outperforming the Nifty and same is expected to continue. Indicators and oscillators have turned bullish on the weekly charts. Stock price has confirmed higher top and higher bottoms on the daily charts.
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