The Nifty bounced back sharply after touching 50-DMA during the previous week. Not only is the weekly candlestick pattern bullish but it has also formed a higher-high and higher-low pattern, pointing to the bulls enjoying an upper hand.
A lot of whipsaws were seen in the last two weeks, confusing traders on both sides. This is a typical sign of a triangle pattern in progress as per Elliott Wave analysis. Looking at the current scenario, the Nifty is progressing in wave ‘C’ of the five-wave triangle pattern. And once the pattern concludes its ‘E’ wave, new impulse movement will follow, which can push the index towards 15,500.
Furthermore, the daily RSI oscillator is defending its 40 mark and the possibilities of unfolding pullback buy setup after crossing 60 can push prices on the higher side.
At the same time, recently 50 weekly SMA gave a bullish crossover above 100-week SMA, which suggests prices will trade with a bullish bias in the long-term timeframe too.
Nevertheless, a descending trend line connecting 15,430 and 15,270 levels needs to be breached to confirm the new impulse wave upside. Any decisive move below 14,750 will give an early sign of continuation of the correction, which can push the index towards 14,300.
Bank Nifty remained range-bound movement through the week but managed to give a higher closing. As long as the index trades well above 35000, there is a possibility of a positive bias.
Here are the 3 top buys that can give up to 17 percent return in the short term:
GAIL (India): Buy around Rs 145 | Target: Rs 170 | Stop Loss: Rs 132 | Upside 17%
The stock is expected to give Cup and Handle breakout on the daily chart with decent volume. A bullish crossover in Stochastic and MACD are looking supportive for this upside breakout. Positive crossover of 20 and 50-DMAs indicates strength. Key support lies at Rs 132-136 zone and until this break decisively, long position can be held. Investors can take entry around Rs 145 with a stoploss of Rs 132 on a closing basis for the target of Rs 170 levels.
Mishra Dhatu Nigam: Buy around Rs 195 | Target: Rs 220 | Stop Loss: Rs 180 | Upside 12%
The stock on the daily and weekly charts is showing a retest of the neckline of its inverted head and shoulder formation, which is broadly positive. The incremental volume activity post-breakout formation indicates further bounce back from the neckline. The stock is trading well above short and medium-term averages, which indicates that an uptrend wave is likely to continue in the near-term. One can buy the stock around 195 for the target of 220 and 230 keeping a stop loss of 180 marks.
Mahindra & Mahindra:-Buy around Rs 840 | Target: Rs 925 | Stop Loss: Rs 835 | Upside 10%
The scrip spurted from a low of Rs 798 and started consolidating in the zone of broader levels, showing stability in the upcoming sessions. The emerging line of polarity on the daily time frame is suggesting bullish momentum in the scrip.
Indicators and oscillators are also showing a conducive scenario in the coming sessions. Based on these technical structures, one can go long in the scrip around Rs 835 for the target of Rs 925 with a stoploss of Rs 800.
The author is Head of Technical Research at Narnolia Financial Advisors LtdDisclaimer: The views and investment tips expressed by 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.