By Jigar S Patel, senior manager - equity research at Anand Rathi
The recent activity on D-Street was notably influenced by geopolitical tensions between Iran and Israel, putting significant pressure on domestic markets at the start of the trading week that ended April 19. The Nifty 50 index experienced a breach below the critical support levels of 22,300 and even dipped below 22,000 to touch a weekly low of 21,777. However, a robust recovery in the week's final session helped the index reclaim the 22,000 mark, though it still concluded the week with a loss exceeding 1.6 percent.
From a technical standpoint, the index corrected more than 78.6 percent of its previous rally but found support at the rising trendline's placement and the lower boundary of the ascending channel.
Currently moving within this upward channel, sustaining above the weekly low of 21,777 may indicate a potential test of the channel's higher end in the coming weeks, situated above the 22,800 mark. This conviction stems from observing a reversal candlestick pattern on the weekly scale and noting that the FIIs' long-short ratio in index futures has reached approximately 35 percent, signaling limited downside potential.
In the upcoming week, immediate resistance is anticipated at 22,180, and breaching this level might induce short covering in index futures, whereas a breach of 21,777 could trigger further market panic.
The Nifty Bank index underwent a correction of around 2,000 points from the 48,500 mark, ultimately closing the week with a loss of approximately 2 percent. Despite an initial Cup and Handle breakout attempt, the index corrected around 78.6 percent of its prior rally. It has rebounded from a significant rising trendline's placement, with further panic unlikely unless the 46,500 support level is breached. On the upside, immediate resistance is observed at 48,000, with sentiments expected to improve upon surpassing this level.
Here are three buy calls for the next 2-3 weeks:
Hikal: Buy | LTP: Rs 298.55 | Stop-Loss: Rs 250 | Target: Rs 375 | Return: 26 percent
Over the previous year, Hikal has established a strong support zone spanning from Rs 250 to Rs 260, undergoing numerous tests highlighting its resilience amidst downward pressure. Recently, a significant breakthrough occurred as Hikal surpassed a bearish trend line that had restricted its movement for the past 3-4 years, and notably, it has maintained this breakthrough. This signals a fundamental shift in market sentiment toward the stock.
Additionally, on the indicator front, the weekly relative strength index has exceeded its own multi-year bearish trendline, indicating bullish momentum in the short to medium term.
Considering these technical signals, we've advised traders and investors to initiate long positions in Hikal within the range of Rs 285 to Rs 300, with an upside target set at Rs 375, reflecting our optimistic view on the stock's potential for appreciation.
To manage risk effectively, we suggest placing a stop-loss order near Rs 250 on a daily closing basis to mitigate against adverse market movements.
Navin Fluorine International: Buy | LTP: Rs 3,223 | Stop-Loss: Rs 3,040 | Target: Rs 3,600 | Return: 12 percent
Following its Double Top formation near Rs 4,900-4,800 zone, Navin Fluorine International has experienced a significant downturn, shedding 41 percent in price. However, in the last 5-6 trading sessions, it has found support near Rs 3,000 mark. Concurrently, a Bullish Crab pattern has materialized on Navin Fluorine's daily chart, signaling a potential reversal in trend.
Moreover, "regular bull divergence"* has been identified on the relative strength index (RSI) daily scale, indicating strengthening bullish momentum.
Based on these technical indicators, investors may consider initiating long positions within the range of Rs 3,200-3,250. The upside target for this trade is set at Rs 3,600. To manage risk, a stop-loss order should be placed near Rs 3,040, helping to limit potential losses in case the trade doesn't perform as expected.
NOTE: If the price is making lower lows, but the oscillator is making higher lows , this is considered to be a regular bullish divergence.
SBI Cards and Payment Services: Buy | LTP: Rs 732 | Stop-Loss: Rs 665 | Target: Rs 840 | Return: 15 percent
Following a peak near the Rs 933 level, SBI Card underwent a significant downturn, experiencing a sharp decline of 27 percent in its overall value. However, over the last week, SBI Card has managed to stabilize around Rs 675 levels, forming a sustained support base.
Notably, during this period, a bullish ALTERNATE pattern has emerged near the Rs 680-710 level, providing further confirmation of positive market sentiment. Additionally, analysis of the daily RSI indicator reveals a bear trendline violation, indicating a favorable outlook for the stock.
Considering these factors alongside chart patterns, investors may find it prudent to consider initiating buy positions within the range of Rs 710-740, with an upside objective targeted at Rs 840. To manage risk, a stop-loss order should be set at Rs 665 on a daily closing basis, protecting potential downside movements.
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.
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