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Nifty range for the weeks ahead, and three stocks that can give up to 22% return

The index is likely to trade in the 16,800-17,800 range as the maximum put and call option additions are seen there for the Sept 30 expiry. Meanwhile, Escorts, HDFC AMC and HDFC Bank look promising short-term buys.

September 10, 2021 / 10:50 AM IST
 
 
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For the last six weeks, the Nifty has been moving higher and testing fresh lifetime highs.

The Nifty Midcap and Smallcap indices have been outperforming the benchmark index for the past couple of sessions.

Nifty seems to be riding the upper Bollinger bands for the past couple of weeks, and it has been successfully breaching the previous weeks’ highs. So, a simple bar chart analysis tells us that the index is in a strong bullish phase.

On the open interest front (September 30, 2021, expiry), the maximum addition is seen at the 17,800 call options. On the put side, addition is seen at the 17,000 and 16,800 strikes. Thus, we can expect the broader range of the index to be 16,800-17,800 in the weeks to come.

As far as the indicators are concerned, the RSI, plotted on the weekly time frame, remains above the 50-mark and is drifting higher, indicating the bulls are trying to maintain their hold on the index.

Close

We expect the bullish momentum to continue, which can take the index higher towards 17,812 (1.27 percent extension level of the rise from 14,151-15,915, projected from the 15,513-mark).

If the index breaches 17,812, it might move towards 18,011 (1.38 percent extension level of the rise from 14,151-15,915, projected from the 15,513 mark).

Going ahead, the psychological level of 17,000 will act as a key support level. If it goes down, our bullish view will be negated, and we might see the index move lower towards the 16,764 level.

Here are three buy calls for the next 3-4 weeks:

Escorts | LTP: Rs 1,380.10 | Target price: Rs 1,682 | Stop-loss: Rs 1,300 | Upside: 22%

The broader range of the stock has been Rs 1,095-1,251.

The RSI, plotted on the weekly time frame, has been hovering around 50 in the past few weeks. On September 6, it made a move towards the overbought level, indicating that the bulls are taking control.

Going ahead, Rs 1,468 (previous swing high) is going to act as a make-or-break level. If it moves higher, we might see a move towards Rs 1,571 (50 percent extension level of the rise from Rs 526-1,468, projected from Rs 1,100) and Rs 1,682 (61.8 percent extension level of the rise from Rs 526-Rs 1,468, projected from Rs 1,100).

The level of Rs 1,300 (20-day SMA) will act as a red flag. If it goes below this level, our bullish view will be negated, and we might see prices moving towards Rs 1,250 (breakout level).

The technical parameters mentioned above point towards the possibility of the prices moving higher -- towards the Rs 1,468-mark immediately.

If the stock breaches this level, we might see it move towards the Rs 1,571 and Rs 1,682 level, eventually.

HDFC Asset Management Company (AMC) | LTP: Rs 3,248.40 | Target price: Rs 3,712 | Stop-loss: Rs 3,200 | Upside: 14%

HDFC AMC can be seen moving in a range for the past nine months on the monthly time frame, after a good upmove from Rs 2,070.

On the weekly time frame, it has been forming a rounding bottom pattern near the 50 percent retracement level of the rise -- from Rs 2,070 to Rs 3,358.

The RSI, plotted on the weekly and daily time frame, can be seen placed above the 50-mark. Currently, it can be seen moving higher towards the overbought level, indicating bullish momentum in prices.

Going ahead, Rs 3,496 (61.8 percent extension level of the rise from Rs 2,070-3,358, projected from Rs 2,714) is going to act as a hurdle.

If it moves above this level, we might see it move towards Rs 3,712 (78.6 percent extension level of the rise from Rs 1,623-2,896, projected from Rs 2,354).

The Rs 3,200 level (multiple touchpoint level) will act as a red flag. If it goes below this level, our bullish view will be negated, and we might see it move lower towards Rs 3,047 (multiple touchpoint level).

The technical parameters mentioned above point towards the possibility of the prices moving higher -- towards the Rs 3,496-mark.

If the price breaches this level, we might see it move towards the Rs 3,712 level.

HDFC Bank | LTP: Rs 1,568.60 | Target price: Rs 1,733 | Stop-loss: Rs 1,500 | Upside: 10%

This stock, on the monthly time frame, has been forming a higher high, higher low pattern since June 2020, indicating that the long-term trend remains bullish.

On the weekly time frame, it consolidated after testing a high of Rs 1,641 on February 15, 2021.

A couple of weeks back, it attempted to breach the upper range of the consolidation but failed to sustain above it on a closing basis.

The RSI, plotted on the daily and the weekly time frame, can be seen placed above the 50-mark. Currently, it seems to be moving higher, indicating that the bulls have taken control of the trend.

The key resistance levels to watch out for are Rs 1,641 and Rs 1,661 (previous swing high and 50 percent extension level of the rise from Rs 1,025-1,641, projected from Rs 1,353), followed by Rs 1,733 (61.8 percent extension level of the rise from Rs 1,025-1,641, projected from Rs 1,353).

The multiple touch point of Rs 1,500 will act as a red flag level, followed by Rs 1,480 (20-week SMA).

The technical parameters mentioned above point towards an upmove towards Rs 1,641-1,661 immediately.

If the stock breaches Rs 1,661, we might see it head higher towards Rs 1,733.

(The author is a technical analyst at GEPL Capital)

Disclaimer: The views and investment tips 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 making any investment decisions.
Karan Pai
first published: Sep 10, 2021 10:50 am

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