Nifty has managed to form a support base in the range of 11,850-11,800 twice in the recent past and hence, this range now becomes sacrosanct for the near term.
The last week started on a weaker note as the benchmark indices continued their previous week’s corrective phase while broader markets, too, witnessed some sell-off in an initial couple of trading sessions.
However, on December 11, Nifty rallied sharply in the last hour of trade post forming a low of 11,832. This reversal was then followed by a consecutive gap up openings on the last two sessions and the index rallied higher to end the week well above the 12,000-mark.
Nifty again took support in the range of 11,850-11,800 and resumed its higher degree uptrend. We remained optimistic on the markets in the recent corrective phase. The strategy of ‘buy on dips’ has certainly worked quite well in the last few months.
Now, if we look at the recent chart structure, Nifty has managed to form a support base in the range of 11,850-11,800 twice in the recent past (i.e. in mid-November and in the last week) and hence, this range now becomes sacrosanct for the near-term.
As broader markets also participated in the rally in the last couple of sessions, it is clear that the market has resumed its uptrend. Hence, we maintain our optimistic stance and advise traders to trade with a positive bias.
As per the reciprocal retracement theory, the probable target for Nifty in the near-term is seen around 12,250-12,300, whereas the immediate supports are placed around 11,950 and 11,850.
During the week, metals, auto and banking were the outperforming sectors which had seen the up-move with a good rise in volumes.
These are likely to continue their momentum in the near-term and hence, traders are advised to continue riding the trend and look for stocks within these sectors (along with selective pharma names too) for trading.
Here are two buy calls for the next three-four weeks:
Balrampur Chini Mills | Buy | LTP: Rs 169.90 | Target price: Rs 203 | Stop loss: Rs 153.70
Sugar stocks are back in momentum, and this stock has broken above key levels after a period of consolidation, confirming a multiple-pattern bullish breakout.
On a smaller scale, we are witnessing the continuation of flag breakout whereas. On a higher scale, the stock has confirmed a ‘Cup and Handle’ breakout with the potential of a strong upside in the near-term.
The breakout is seen with a good increase in volume and with a positive price structure on charts across all the major time frames. We expect outperformance by this counter in the near term.
Larsen & Toubro | Buy | LTP: Rs 1,306 | Target price: Rs 1,355 | Stop loss: Rs 1,278
This stock has not participated in the current bull run and has now reached its long-term support zone at Rs 1,280-1,290.
In the recent past, this zone acted as a strong demand zone resulting in a strong bounce back. In May, the stock rallied from the levels of Rs 1,290 to Rs 1,586 whereas, in September, the stock rallied from Rs 1,290 to Rs 1,550.
With prices reaching the demand zone and with the oscillators turning upwards from the oversold zone, we expect a strong bounce back in the near term.
(The author is Chief Analyst-Technical & Derivatives, Angel Broking)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.