Gains in the stock market indices started in August after a couple of months of consolidation and continued this month as well, consistently reaching record highs in the week ended September 3.
Inflows from foreign institutional investors picked up last week as the dovish comments by Jerome H Powell, chair of the board of governors of the US Federal Reserve System, the first-quarter GDP growth data and auto sales numbers lifted sentiment.
Technically, after crossing the crucial 17,000 mark, the Nifty 50 decisively surpassed the resistance levels of 17,100-17,200-17,300 in the last three days of the previous week and registered a 3.7 percent weekly gain to close at 17,323.60. All sectoral indices, along with index heavyweight Reliance Industries, participated in the rally.
Experts said the momentum is expected to remain in the bulls’ basket but considering the hefty run-up until last week, some amount of profit-booking and consolidation can’t be ruled out before the next crucial resistance of 17,500.
“Although the recent momentum has been exceptionally strong, we can see some extreme levels in the benchmark index now,” said Sameet Chavan, chief analyst-technical and derivatives, at Angel Broking. “If we take a broader view, we can see the Nifty reaching the 200 percent ‘Fibonacci Retracement’ of last year’s massive decline from a January 2020 high to a March 2020 low. Also time-wise, the Nifty has entered the seventh zone as per ‘Fibonacci Time Series’ on the monthly timeframe chart.”
Chavan said a couple of important key ratios are coinciding at the current juncture and it would be unfair to overlook them. He advised traders to be on the safer side by booking profits in the rally and avoid taking aggressive long positions for a while.
“Momentum traders can still continue with their stock-specific trades, but need to follow strict stop-losses, and booking timely profit is advocated,” he said.
Chavan said the 17,400-17,500 level should be considered the immediate hurdles, and one should avoid being complacent.
“On the flipside, 17,200-17,050 should be seen as key supports for the forthcoming week. The first sign of weakness would start below 17,000 after which the crucial make-or-break support zone of 16,700-16,600 would be tested,” he said.
Here are 10 trading ideas by experts for the next 3-4 weeks. Returns are based on the September 3 closing prices:
Expert: Nandish Shah, Technical Research Analyst at HDFC Securities
Mastek: Buy | CMP: Rs 2,798 | Target: Rs 3,080 | Stop Loss: Rs 2,650 | Return: 10 percent
The stock price has broken out on the daily and weekly charts with higher volumes. The primary trend of the stock is positive where it is trading above its all-important short-term and long-term moving averages. Plus, the Directional Indicator (DI) is placed above the Minus DI while the Average Directional Index (ADX) line is rising and placed above 25, indicating momentum in the current uptrend. The daily Relative Strength Index (RSI) line witnessed a trendline breakout, which is a bullish development for the short term. We recommend buying Mastek at the current market price of Rs 2,798 for a target of Rs 3,080, keeping a stop-loss at Rs 2,650.
RPSG Ventures: Buy | CMP: Rs 720 | Target: Rs 815 | Stop Loss: Rs 670 | Return: 13 percent
The stock price has broken out from the bullish flag pattern on the weekly chart, indicating continuation of the primary uptrend. On the daily chart, the stock price has broken out from the trading range of the last few days to close at the highest level since July 29, 2021. Accumulation was seen during the last few weeks where volumes are sharply higher during the up weeks as compared to down weeks. Daily RSI and Money Flow Index (MFI) line witnessed a trendline breakout, which is a bullish development for the short term. We recommend buying RPSG Ventures at CMP of Rs 720 for a target of Rs 815, keeping a stop-loss at Rs 670.
Grindwell Norton: Buy | CMP: Rs 1,371 | Target: Rs 1,520 | Stop Loss: Rs 1,290 | Return: 11 percent
The stock price has broken out on the weekly chart to close at an all-time high with higher volumes. The stock price is forming a bullish higher-top-higher-bottom formation on the weekly chart. Daily RSI and MFI line witnessed a trendline breakout, which is a bullish development for the short term. Plus, DI is placed above the Minus DI while the ADX line has started rising, indicating that the stock is likely to gather momentum in the coming days. We recommend buying Grindwell Norton at CMP of Rs 1,371 for a target of Rs 1,520, keeping a stop-loss at Rs 1,290.
Expert: Jay Thakkar, Vice President and Head of Equity Research at Marwadi Shares and Finance
Coal India: Buy | CMP: Rs 146.35 | Target: Rs 155-160 | Stop Loss: Rs 141 | Return: 6-9.3 percent
The stock has formed an Inverse Head and Shoulders pattern, which is a bullish reversal pattern. The momentum indicators are well into the buy mode, which is also quite positive for the stock. The breakout has come with an increase in volumes as well as a bullish crossover in its momentum indicators, hence it’s a price volume and momentum breakout.
Manappuram Finance: Buy | CMP: Rs 163.65 | Target: Rs 179 | Stop Loss: Rs 154 | Return: 9.4 percent
The stock has fallen in an impulsive wave structure i.e., a five-wave declining structure. Generally, after this wave structure, there is a minimum 38.2 percent retracement of the entire fall, which will take the stock to Rs 179. The short-term momentum indicators are well in the buy mode, which is a positive sign and this can lead of short-covering in the near term.
Expert: Ashis Biswas, Head of Technical Research at CapitalVia Global Research
BPCL: Buy | CMP: Rs 491.10 | Target: Rs 550 | Stop Loss: Rs 438 | Return: 12 percent
The stock has reversed from the support of the 200-DMA and since then there has been a shift in its momentum. Indicators such as the MACD and RSI show that the momentum in the stock is likely to continue. We recommend a buy on BPCL above Rs 490 with a target of Rs 550. Investors are advised to maintain a stop-loss of Rs 438.
Dabur India: Buy | CMP: Rs 641.25 | Target: Rs 690 | Stop Loss: Rs 568 | Return: 7.6 percent
Dabur India has been trading above the 200-DMA, which shows the positive momentum in the stock. It is trading in an ascending channel and has reversed from the support of the ascending channel. It has also reversed from an important support level near the 40-EMA. We recommend a buy above Rs 635 with a target of Rs 690 and a stop-loss of Rs 568 for the medium term.
Britannia Industries: Buy | CMP: Rs 4,124.2 | Stop Loss: Rs 3,790 | Target: Rs 4,350 | Return: 5.5 percent
Britannia broke its all-time high recently. The stock has picked up momentum since then and the MACD and RSI indicate that it is likely to continue. We recommend a buy on Britannia with a target of Rs 4,350. Investors are advised to maintain a stop-loss of Rs 3,790.
Expert: Rohan Shah, Senior Technical Research Analyst at BP Wealth
Sun Pharma: Buy | CMP: Rs 789 | Stop Loss: Rs 750 | Target: Rs 860 | Return: 8.9 percent
The stock registered a decisive breakout from the rising resistance trendline in late July, which also led the price to surpass the 50 percent Fibonacci retracement level of its previous decline from Rs 1,200 to Rs 315. After a sharp move-up in late July, the stock went into hibernation and formed a strong base at the 20-DEMA, from which it broke out last week with strong volumes, which increases the reliability of the breakout. The momentum indicators are in buy mode, which compliments the bullish view on the price.
Larsen & Toubro: Buy | CMP: Rs 1,691 | Stop Loss: Rs 1,609 | Target: Rs 1,830 | Return: 8.2 percent
In mid-July, the stock registered a breakout from a multi-month resistance zone of Rs 1,580-1,610 with surge in volumes, which is a bullish signal for the medium-term trend. After the breakout, the price turned sideways and last week, the price witnessed an upside breakout from the sideways range, which is a bullish signal for the short term. The RSI momentum indicator has reversed taking support at 60 levels and has given a bullish moving average crossover, which signifies strength in the price and complements the bullish view on the price.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.