By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
After years of anticipation, the Federal Reserve enacted a 50-basis-point rate cut, which sparked positive momentum across global indices. The Nifty 50 index, which had been struggling near the 25,500 level for most of the trading sessions, finally broke out on Friday, reaching a new high around 25,850.
From a technical standpoint, a corrective move within the 25,300–25,500 zone was initially expected. However, with the fresh breakout, the current momentum could push the index toward 26,000 or higher. Despite this, we remain cautious on the long side, as several warning signs have emerged.
The foreign institutional investors’ (FII) long-short ratio has reached 75 percent, a negative divergence is visible on Nifty 50's weekly chart, and the monthly RSI (Relative Strength Index) has crossed above the 80 mark—historically signaling a temporary top in the coming weeks. This makes the situation complex, as the index displays strong performance while other market indicators flash caution. Given these mixed signals, it’s advisable to adopt a stock-specific strategy and take a conservative approach to setting upside targets, rather than focusing solely on Nifty 50 levels. Immediate support lies at 25,400, and any breach of this level could signal the end of the current bullish trend.
Meanwhile, the Nifty Bank index has reached a new all-time high, breaking above the 53,350 mark after two months of consolidation. Breakouts in key stocks like HDFC Bank and Kotak Mahindra Bank are driving the index, which could potentially rise toward 54,500. However, the trend-defining support level is set at 53,000, and a breach of this level could result in a trend reversal.
Here are three buy calls for short term:
Adani Power | CMP: Rs 665
Recently, Adani Power broke through a key bearish trendline on the daily chart, suggesting a potential reversal in momentum from its previous downtrend. Prior to this breakout, the stock had formed a double bottom pattern, a bullish reversal structure that indicates strong support and a potential shift in price direction. This double bottom was accompanied by a bullish divergence in the RSI, where the RSI moved higher while the price remained low, signaling weakening selling pressure and a possible move upward. This bullish divergence occurred near a significant demand zone and previous breakout range, which further enhances the positive sentiment surrounding the stock. These technical factors suggest that Adani Power is positioned for a strong upward move. As a result, a long position is recommended in the price range of Rs 655-675, with a target of Rs 755. To manage risk, a stop-loss should be placed at Rs 620, with close attention to a daily close below this level to exit the position.
Strategy: Buy
Target: Rs 755
Stop-Loss: Rs 620
SBI Cards and Payment Services | CMP: Rs 787
On a weekly chart, SBI Card consolidated within a range of approximately Rs 680 to Rs 750, signaling a phase where the stock price remained confined within these levels, neither breaking down nor rallying. This period of consolidation occurred near a potential reversal zone, with the lower boundary of the consolidation being around Rs 680. Such zones often indicate that the stock is nearing a point where its trend may shift, either resuming an uptrend or reversing from a prior decline.
During this consolidation, SBI Card formed a triple bottom pattern, a bullish reversal structure that indicates strong support at the lower end of the range. This pattern, coupled with bullish divergence on the daily RSI, further reinforced the likelihood of an upward move. Bullish divergence on the RSI indicates that while the stock's price may have been declining or remaining flat, momentum was building in the opposite direction, suggesting growing buying pressure.
Following this consolidation, SBI Card successfully broke out of Rs 750 zone and has sustained above it, confirming the strength of the breakout. The stock is now positioned for further upward movement, with a target price of Rs 900. Investors are advised to take a "buy on dip" approach, entering the stock at levels till Rs 765 for potential upside gains. To manage risk, a stop-loss should be set at Rs 725 on a daily closing basis, ensuring downside protection in case the stock fails to maintain its momentum. This technical setup, backed by the triple bottom pattern, RSI divergence, and the breakout, makes SBI Card a favourable long position for traders and investors.
Strategy: Buy
Target: Rs 900
Stop-Loss: Rs 725
Siemens | CMP: Rs 6,833
Over the past five trading sessions, Siemens has been consolidating within a narrow range of Rs 6,600 to Rs 6,800, with the stock price hovering near its 100-day Exponential Moving Average (DEMA). This prolonged period of price consolidation indicates a potential base formation, where the stock is stabilizing before making a decisive move. The fact that this consolidation is occurring just above its bear trendline (as indicated on the chart) strengthens the likelihood that Siemens is building a strong support base, signaling that selling pressure might be waning.
In the most recent trading session, a notable technical development occurred: the RSI on the daily chart broke above its previous bear trendline. This breakout in the RSI is a clear indicator of improving momentum, suggesting that buyers are gaining strength and positive momentum is building in the stock. Based on these factors, a long position in Siemens is recommended, with an entry point around Rs 6,800. The price target for this trade is Rs 7,250, offering a strong potential upside. To manage risk, a stop-loss should be placed at Rs 6,575 on a daily close basis.
Strategy: Buy
Target: Rs 7,250
Stop-Loss: Rs 6,575
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
