Rajesh Palviya
The Nifty started the week on a flat note. It remained consolidated for the most part of the week and closed on a subdued note.
On the weekly chart, the index formed a Doji candle for the third consecutive week, indicating indecisiveness among market participants.
The index has formed a double top on the weekly chart. On the lower side, 11,800 is likely to act as a critical level in the near term, however, the index is moving in a higher-top and higher- bottom formation on the weekly chart, indicating a positive bias.
The chart pattern suggests that if the Nifty crosses and sustains above 12,035 level, it will witness fresh buying action that would lead the index towards 12,100-12,150 levels. If the index goes below 11,800, it will witness selling, which will take the Nifty towards 11,700-11,620.
The Nifty is trading above its 20, 50, 100 and 200-day simple moving average (SMA), which are an important short-term moving average, indicating positive bias in the short term.
The Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect the Nifty to trade in the range of 12,100-11,750, with a mixed bias.
The weekly strength indicator Relative Strength Index (RSI) is moving upwards and is quoting above its reference line indicating a positive bias. However, the momentum oscillator Stochastic has turned negative from the overbought zone, pointing to a possible consolidation or a corrective move in the near term. We expect metals, housing finance, PSU banks to show bullishness in the coming weeks.
Bank Nifty
The Bank Nifty started the week on a flat note and traded with extreme volatility on either side. The Bank Nifty closed at 31,112, with a gain of 103 points on a weekly basis.
On the weekly chart the index has formed a 'Doji' candle. The index is moving in a higher top and higher bottom formation on the weekly chart, indicating a positive bias. The chart pattern suggests that if the Bank Nifty crosses and sustains above 31,480, it will witness buying that would lead the index to 31,660-31,780 levels.
However, if the index breaks below 30,970 level, it will witness selling that would take the Bank Nifty towards 30,750-30,300.
The Bank Nifty is trading above 20, 50, and 100 and 200- day SMA, indicating a positive bias in the short to medium term.
The Bank Nifty continues to remain in an uptrend in the medium term, so buying on dips continues to be our preferred strategy. For the week, we expect the Bank Nifty to trade in the range of 31,700-30,300, with a mixed bias.
The RSI and Stochastic have both turned positive and are above their respective reference lines, indicating a positive bias.
Here is the list of four stocks that could return 4-11 percent in near term:
Rallis India | Buying Range: Rs 184-182 | Stoploss: Rs 176 | Target: Rs 197-204 | Return: 8-11 percent
On the weekly chart, the stock price has broken out from a Head & Shoulder formation on closing basis and has made a fresh 52-week high. The stock continues to make a series of higher tops and higher bottoms. This breakout was accompanied by huge volumes, indicating increased participation.
The RSI and Stochastic both are in positive territory, which supports upside momentum to continue in the near term. The stock price is sustaining well above its 20 and 50 and 100 day-SMA, which support bullish sentiments ahead.
Housing Development Finance Corporation | Buying Range: Rs 2,240-2,220 | Stoploss: Rs 2,183 | Target: Rs 2,325-2,340 | Return: 4-5 percent
On the daily chart, the stock has bounced from the key support of Rs 2,200 and is moving towards the swing high of Rs 2,265 levels. It has also bounced after retesting the 20-day SMA.
The RSI and Stochastic are in a positive territory, which supports upside momentum to continue in the near term. The stock price is sustaining well above its 20 and 50-day SMA, which supports bullish sentiments ahead.
Power Finance Corporation | Buying Range: Rs 116-113 | Stoploss: Rs 110 | Target: Rs 123-127 | Return: 7-11 percent
On the weekly chart, the stock has broken above multiple resistances near Rs 113-114 levels and is sustaining above the same. This breakout is accompanied by reasonably good volumes, which supports bullish sentiments ahead.
The RSI continues to trend higher which supports upside momentum to continue in the near term. The stock price is sustaining well above its 20, 50 and 100-day SMA, which supports bullish sentiments ahead.
Canara Bank | Buying Range: Rs 216-213 | Stoploss: Rs 205 | Target: Rs 234 -238 | Return: 9-11 percent
On the weekly chart, the stock has decisively broken out from multiple resistances of Rs 212-214 levels and sustaining above the same. On the daily and weekly chart, the stock has witnessed a shift to an upward trend, forming a series of higher tops and higher bottoms.
The RSI and Stochastic both are in positive territory, which means upside momentum will continue in the near term. The stock price is sustaining well above its 20 and 50-day SMA, which supports bullish sentiments ahead.
(The author is DGM - Research (Head Technical & Derivatives Research) at Axis Securities.)
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