Jigar S Patel, Senior Manager, Equity Research, Anand Rathi
It was a tough fight between the bulls and the bears during the week ended May 19. The bears tried their best to bring in some pessimism, but the bulls remained resilient throughout the week. As a result, the Nifty corrected from 18,459 to 18,060, but managed to recapture the 18,200 mark on closing.
Due to profit booking, we witnessed some softness in the Nifty during the week. Now we are witnessing a reversal candlestick pattern on the weekly scale, and the range of that candle might dictate the market trend in the immediate future.
Ihe India VIX has turned from the 10–11 zone to 12, and historically, we have witnessed heavy volatility when the VIX has turned from this zone. The recent price action seemed to be a bit like index management, as the rally was driven by a handful of stocks.
Thus, we once again advise traders to book profits hereon as there could be a sharp corrective move in the coming weeks. On the downside, the immediate support is at 18,060 and a breach of the same might result in further profit-booking towards 17,800 in the coming sessions. The upside cap for the index is around 18,450, in case of further optimism.
Once again, the Nifty Bank index outperformed the benchmark indices by closing the week in the green. As of now, we are witnessing negative divergence in the daily RSI, hence, in the coming sessions, fresh buying in the index is advisable only above the 44,150 mark.
On the downside, 43,400 seems to be an important support since that is the placement of a rising trendline. A breach of the same might result in some pessimism in banking stocks.
Here are three buy calls for the next 2-3 weeks:
Firstsource Solutions: Buy | LTP: Rs 134 | Stop-Loss: Rs 114 | Target: Rs 155 | Return: 15 percent
For the last one year this stock has been consolidating in the range of Rs 100-120. Recently, it saw a clean breakout along with heavy volume, which indicates a further upside.
Additionally, on a weekly scale, the MACD (moving average convergence divergence) is displaying a crossover exactly above the zero line, which is a sign of further bullish momentum.
One can buy in the range of Rs 125-135 for a target of Rs 155, and stop-loss at Rs 114.
Amara Raja Batteries: Buy | LTP: Rs 639 | Stop-Loss: Rs 615 | Target: Rs 690 | Return: 8 percent
This stock has seen a breakout from its previous weekly trading range of Rs 550-620, and is currently well placed above it. On the indicator front, the price action is well above the William Alligator indicator (a trend-following indicator), and the weekly MACD is also displaying a crossover exactly above the zero line, which is a sign of further bullish momentum.
Thus, one can buy in the range of Rs 635-640, with an upside target of Rs 690. The stop-loss would be Rs 615 on a daily close basis.
Jubilant Pharmova: Buy | LTP: Rs 346 | Stop-Loss: Rs 310 | Target: Rs 430 | Return: 24 percent
After hitting a peak of Rs 925 in May 2021, the stock has nose-dived, resulting in a 71 percent erosion in price. But from about Rs 300-levels in March 2023, it has picked up nicely.
Additionally, it has made a Bullish Bat pattern on a weekly scale, along with bullish divergence, i.e., the price was scraping lower lows and the MACD was hitting higher lows (refer to the chart).
Hence, one can buy in the range of Rs 340-350, with an upside target of Rs 430. The stop-loss would be Rs 310 on a daily close basis.
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