Rohan Patil
Since May 27, Nifty has witnessed an uninterrupted rally of almost 12 percent and is trading at a two-month high.
On June 3, the benchmark index witnessed a gap-up opening again, following the global peers and held the gains during the day. However, we saw some profit-booking in the final trading hour.
The index is trading in a rising channel pattern and is currently spotted above its upward rising trendline support on a monthly chart.
On the monthly timeframe, Nifty is trading in a range between the 50 and 100-day exponential moving averages.
When we observe volume activity, there has been an above-average volume setup for the last three months.
For two consecutive months, we witnessed a strong decline in volatility as India VIX has drifted almost 4 percent for May.
In March, we saw a strong rise in the India VIX index which almost equals the year 2008 level.
The next resistance for Nifty is seen at 10,200 and 10,550, which happens to be 50- day exponential moving average and 61.80 percent retracements of the entire fall seen from January 2020 (12,430) to March 2020 (7,511).
The breakout above 10,200 will open the gate for the 10,550 level. Meanwhile, 9,700 will act as strong support for the index, the breach of that level will be a breakdown of the trend line.
Here are three buy recommendations for the next 3-4 weeks:
Tech Mahindra | Buy | LTP: Rs 552 | Target price: Rs 610 | Stop loss: Rs 520 | Upside: 11%
After a prolonged consolidation, Tech Mahindra has witnessed a Symmetrical Triangle pattern breakout on the daily timeframe.
Currently, prices are trading above its smaller degree trendline support, looking to accelerate higher on the daily chart.
Momentum oscillator RSI (14) is reading above 55 level on the daily chart with positive crossover on the
cards.
However, prices are trading above the four-week high, sustaining above the 21- day exponential moving average on the daily scale.
Traders can accumulate the stock in a range of Rs 550 - 555.
MGL, on the daily chart, has witnessed Rectangle pattern breakout and is trading above its trendline support.
Momentum oscillator RSI (14) is reading above 60 level on the daily chart with positive crossover on the cards.
The recent spurts in prices were so strong that the stock closed above its 21 and 50-day exponential moving averages.
The prices have taken support at 38.20 percent Fibonacci retracement at Rs 855.60 from its intermediate low of Rs 663.90 to its intermediate high of Rs 990.
The overall chart structure on the daily and weekly timeframe looks promising to move higher.
Traders can accumulate the stock in a range of Rs 1,000 -1,018.
HAL, on the daily chart, has completed rounding bottom formation, looking to accelerate on the higher side.
Momentum oscillator RSI (14) is reading above 60 level on the daily chart with positive crossover on the cards.
However, for the last few days, prices have been consolidating within a range of 21 and 50 day exponential moving average that is placed in a range of Rs 555-525.
In the previous two trading sessions, the stock has broken its moving average range on the higher side, which is positive for the counter.
Traders can accumulate the stock in the range of Rs 582-587.
(The author is Technical Analyst, Bonanza Portfolio)
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