By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
The last week marked a notable resurgence for the bulls on Dalal Street, with the benchmark indices experiencing a swift recovery. Initially, the Nifty index breached the 21,900 support level but managed to bounce back, leading to a robust rally throughout the week. This resulted into the index reclaiming the 22,500 mark. By the week's end (on May 18), the index had posted gains of approximately 2 percent.
From a technical perspective, as anticipated, the index reversed from the support of the rising channel. Moving forward, we expect the markets to test the upper band of this channel, around 23,000 or higher. Consequently, the recommendation remains to buy on dips, at least until the elections.
On the downside, the immediate support level is at 22,300, and a breach of this could see Nifty move towards 22,100. Given the approaching final phases of the election, which is a significant event, traders are advised to remain cautious.
Meanwhile, the Nifty Bank index also recovered over the week but lagged behind the benchmark indices. The index reclaimed the 48,000-mark, closing the week with a gain of around 1.5 percent. In the upcoming sessions, we anticipate further upside towards 48,800, which represents 61.8 percent of the recent decline. On the downside, support is expected around 47,300 in the near term.
Here are three buy calls for the next 2-3 weeks:
Shriram Finance | CMP: Rs 2,370.45
Recently, Shriram Finance hit a low near the lower Bollinger band, which often indicates a potential reversal from a downtrend to an uptrend. In the most recent trading session, the stock formed a Long-Legged Doji candlestick pattern precisely at this lower Bollinger band level. A Long-Legged Doji, characterized by a small central body and long wicks on both sides, signifies market indecision and potential trend reversal, particularly when it appears at a support level like the lower Bollinger band.
Additionally, the hourly chart shows that Shriram Finance has established a double bottom structure, and there is bullish divergence in the daily stochastic indicator. Bullish divergence occurs when the stock price reaches a new low, but the stochastic oscillator does not, suggesting weakening downward momentum and a potential reversal.
Given these bullish signals, it is recommended to buy Shriram Finance in the price range of Rs 2,355-2,370. The target for this trade is Rs 2,460, with a stop-loss set at Rs 2,300 on a daily close basis to limit potential losses.
Strategy: Buy
Target: Rs 2,460
Stop-Loss: Rs 2,300
Jubilant Foodworks | CMP: Rs 469.4
Jubilant Foodworks has two key technical analysis signals: a bull divergence on the daily Moving Average Convergence Divergence (MACD) indicator and a violation of a bearish trendline that had been in place for 3-4 months. A bull divergence occurs when the stock price forms lower lows while the MACD indicator forms higher lows, indicating a potential reversal from a downtrend to an uptrend.
The breach of the bearish trendline suggests a potential shift in the stock's direction from bearish to bullish. Based on these signals, we advise investors / traders to "go long" in Jubilant Foodworks within the price range of Rs 465-475 per share.
Additionally, upside target of Rs 526 per share, indicating the potential profit opportunity. To manage risk, a stop-loss is advised to be placed near Rs 445 per share, on a daily closing basis.
Strategy: Buy
Target: Rs 526
Stop-Loss: Rs 445
Titan Company | CMP: Rs 3,362.55
Since reaching its peak around the Rs 3,800 mark on April 1, 2024, the stock has experienced a significant downturn, with a decline of nearly 600 points, translating to a 16 percent loss in price. However, amidst this downturn, a compelling opportunity has emerged. Presently, the market exhibits a Bullish AB=CD Pattern with a 1:1 leg ratio, signalling a potential reversal near the Rs 3,200-3,250 zone.
This pattern, coupled with a noteworthy observation from the Relative Strength Index (RSI), adds to the allure of the current juncture. The RSI indicator reveals a complex structure resembling a W shape within the oversold zone, suggesting a robust potential for an upward price movement.
Given these favourable technical indications, investors are encouraged to consider buying within Rs 3,330-3,365 zone, with an optimistic target set at Rs 3,600. To safeguard against adverse price movements, it's advisable to implement a stop-loss order at Rs 3,235, based on daily closing prices.
Strategy: Buy
Target: Rs 3,600
Stop-Loss: Rs 3,235
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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