Karan Pai
Nifty has been steadily moving higher for the last couple of weeks, and in the process, it broke above and sustained the earlier all-time high of 12,430 with conviction.
On the hourly scale, the index broke above the 5-day long consolidation and moved above the 13,000 level to test a new life-time high of 13,079.
A simple bar chart analysis shows that the index is forming a higher high higher low pattern, indicating it is in a bullish mode.
Any corrections may be bought into (buy on dips).
The immediate resistance is placed at 13,450 which also happens to be the level where we can see the highest call writing for the December series.
The extrapolated moves may even take Nifty to the next level of 13,769 which is 127.2 percent retracement of earlier fall from 12,430 to 7,511.
We expect the index to remain bullish and continue to move higher as long as it remains above the 12,742 level.
Here are three buy calls for the next 3-4 weeks:
Tata Steel | LTP: Rs 548.25 | Target price: Rs 645 | Stop loss: Rs 480 | Upside: 18%
Tata steel has been one of the strongest outperformers among the metals.
The stock has been making a higher high higher low pattern for the last 3 weeks after breaking out of a 2-year-old downward slopping channel.
In the previous week, it breached a crucial level of Rs 500 which is a 50 percent retracement level of the fall from Rs 750 to Rs 250.
Both the above-mentioned breakouts were backed by above-average volume, indicating participation in the breakout.
Going ahead, the crucial level to watch out for on the upside is Rs 560 which is a 61.8 percent retracement level of the fall from Rs 750 to Rs 250.
Beyond this, we can expect it to test Rs 645-650 which is a 78.6 percent retracement level of the fall from Rs 750 to Rs 250.
A red flag level for the stock is Rs 480, below which we might see the stock to test Rs 440-400 level.
Motherson Sumi Systems | LTP: Rs 145.30 | Target price: Rs 182 | Stop loss: Rs 130 | Upside: 25%
Motherson Sumi has been forming a higher high higher low pattern, after breaking out of a bullish continuation pattern.
This breakout was backed by above-average volume, indicating interest in the stock as the prices broke out of a 13-week long consolidation.
In the past, we saw a breakout and a close above the Rs 130.80 level which is the 38.3 percent retracement of the fall from Rs 263 to Rs 48.65.
A simple multiple timeframe analysis shows that an immediate resistance is placed at Rs 156. If the prices manage to break above this level, we expect the Rs 182 level to be tested.
A crucial support level is placed at Rs 130, which ideally should act as a change in polarity level.
If this level is breached, we might see the stock go south towards the Rs 110 level.
Tata Consumer Products | LTP: Rs 526 | Target price: Rs 650 | Stop loss: Rs 500 | Upside: 24%
The stock has started the up move after bouncing off the 20-week simple moving average.
The stock has moved 16.5 percent in the previous 6 weeks. A simple look at the bar pattern suggests that the stock has started its next leg on the upside.
On the higher timeframe, we can see the stock has formed a bullish engulfing pattern.
The immediate resistance level is placed at Rs 540, above which, we can expect a further up-move towards Rs 590 and eventually towards Rs 650 level.
A caution level for the stock is Rs 500 level, below which we can see it touch the Rs 460 level.
(The author is a technical analyst - equities at GEPL Capital)
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