Nifty has been enjoying a bull run for the last 16–17 months and in the last few weeks, it has delivered very strong gains.
The recent momentum has been exceptionally strong and we can see some extreme levels in the benchmark index now.
Nifty is near 200 percent Fibonacci retracement of the last year’s massive decline from January 2020 high to March 2020 low.
Time-wise, Nifty has entered the 7th zone as per the Fibonacci time series on the monthly timeframe chart.
A couple of important key ratios are coinciding at the current juncture and it will be unfair to overlook them.
To be on the safer side, we advise traders to keep booking profits in the rally and avoid taking aggressive longs for a while.
Momentum traders can still continue with their stock-specific trades but need to follow strict stop losses and booking timely profit is advocated.
As far as levels are concerned, 17,400–17,500 are the immediate hurdles for Nifty.
On the flip side, 17,200–17,050 are the key supports for this week. The first sign of weakness would start below 17,000 after which the crucial make or break support zone of 16,700–16,600 would be tested.
Here's one buy and one sell call for the next 2-3 weeks:
Bharat Electronics (BEL) | LTP: Rs 199.55 | Target price: Rs 214 | Stop loss: Rs 189.80 | Upside: 7%
This stock saw a massive price drop in the first half of August from its multi-year highs of Rs 190.
The fall got arrested around the cluster of key short-term moving averages as well as the previous breakout points.
After forming a strong base around Rs 160, the stock resumed its higher degree uptrend. In the last three weeks, we have witnessed a V-shape recovery in the stock.
We can see this stock registering a fresh high as it is knocking on the door of Rs 200.
Bajaj Finance | LTP: Rs 7,520.55 | Target price: Rs 7,340 | Stop loss: Rs 7,600 | Downside: 2%
This stock is in a different league and has proved its worth over the last decade or so.
All significant declines over the years have been bought into and this stock has not disappointed even once.
Taking a glance at the recent performance, we can see it taking off in the latter half of August after undergoing a small patch of consolidation.
The higher degree trend undoubtedly remains strongly bullish but the way stock prices behaved in the last three trading sessions, it indicated some exhaustion.
The daily chart depicts three back-to-back ‘Doji’ candles and the first one specifically can be termed as a ‘Gravestone Doji’.
This pattern has a negative implication if we see prices closing below the low of the candle i.e. Rs 7,483.
We are pre-empting this to happen and hence recommend selling with a strict stop loss of Rs 7,600. The immediate target can be seen in the range of Rs 7,340–7,300.
(The author is Chief Technical & Derivatives Analyst at 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.
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