Nifty has been trading in a narrow range of 200 points since the beginning of the November series.
However, indicators and oscillators like MACD and DMI are trading in the bullish territory on the weekly charts.
The primary trend of Nifty is bullish as the index is trading above its 50, 100 and 200 DMAs. Higher tops and higher bottoms are well intact. So, technical indicators are suggesting that the positional trend of the market is bullish.
On October 29, Nifty surpassed the crucial resistance of 11,700, which resulted in a bullish 'cup and handle' formation on the daily charts.
The earlier resistance of 11,700 is expected to interchange its role as support, going forward.
In the derivatives, we see put writing at 11,800-11,700 strike prices, indicating Nifty is likely to find strong support in the range of 11,700-11,800. Unless Nifty closes below it, the trend would be considered bullish for the markets from the derivative side also.
On the higher side call writing was seen at 12,000 level. This is the level at which Nifty has been facing stiff resistance since the last many days and has not been able to conquer it decisively.
However, technical and derivative indicators indicate that it is going to be crossed sooner than later.
Coming to Bank Nifty, it is outperforming Nifty since the beginning of the November series. We have seen long build up in the index during the last week.
We believe that their outperformance is likely to continue for the coming weeks also.
In Bank Nifty, we advise accumulating long positions with a stop loss of 30,300. The target for Bank Nifty is seen at 31,800 and 32,500.
Though major indices are at all-time highs, small and midcap stocks are underperforming till now. However a few sessions ago, the Midcap index has broken out on the daily chart by closing above the resistance level of 16,880.
Moreover, we have experienced that smaller stocks underperform in quarterly results season. Now that is out of the way, we believe that they are likely to reverse their trend of underperformance and can do well from hereon.
Here is a list of three stocks which we think are good buy options at current levels for a holding period of one-three weeks:
Granules India: Buy | LTP: Rs 128.25 | Target: Rs 145 | Stop Loss: Rs 120 | Upside: 13 percent
The stock has broken out from the downward slopping trendline a few sessions ago, adjoining the highs of October 30 and November 8 on the daily chart. The stock price has already broken out on the monthly chart by closing above the resistance level of Rs 123 in October. Oscillators and momentum Indicators like RSI and MACD showing strength in the stock on the weekly charts. Pharma as a sector is doing well and looking good for the short-term.
Cholamandalam Investment and Finance Company: Buy | LTP: Rs 329 | Target: Rs 360 | Stop Loss: Rs 310 | Upside: 9 percent
Chola Finance has broken out on the weekly chart last week by closing above the resistance level of 320 level to close at a 52-week high. Oscillators and momentum Indicators like RSI and MACD are showing strength in the stock on the weekly charts. In the derivatives, we have seen long build up in the Chola Fin future. The stock is trading above its 5-, 20- and 200-day SMA, indicating a positive trend for the short to medium-term.
Rallis India: Buy | LTP: Rs 179.70 | Target: Rs 200 | Stop Loss: Rs 168 | Upside: 12 percent
The stock price has been forming a bullish higher top higher bottom formation on the daily chart. The stock has broken out on the daily chart by closing above the resistance level of Rs 177 to close at the highest level since January 1. The trend of the stock is bullish where the stock price is trading above its 5-, 20- and 200-day SMA. Oscillators and momentum Indicators like RSI and MACD are showing strength in the stock on the daily and weekly charts.
(The author is Senior Technical & Derivatives 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.