Shabbir Kayyumi
The bulls faced a sudden jolt in the middle of the week, but December 27’s recovery enabled the index to settle above the 12,240 level. The overall structure is looking firm, but profit booking at higher levels cannot be ruled out.
The index has formed long leg doji, but inside bar candlestick pattern on the weekly timeframe suggesting a continuation of positive bias to remain intact as long as Nifty is trading above previous week’s low that is placed around 12,118 levels.
Further upsides are likely in the near term towards an immediate target of the cup and handle pattern that comes near the 12,400 level.
A lot of activity in F&O segment is being seen, highest Open Interest (OI) in Put is around 12,000 strikes, whereas maximum Open Interest (OI) in Call is around 12,500 levels. Put-Call ratio is at 1.45.
Bank Nifty continues to soar higher along with Nifty, as long as banking index sustains above 20 DMA standing around the 31,800 mark, it can extend higher towards 33,000-33,500 levels.
Trade recommendation
PVR | Rating: Buy around Rs 1,830 | Target: Rs 2,100 | Stop loss: Rs 1,770 | Upside: 14 percent
The stock was undergoing consolidation in the longer time frame and has resumed its prior trend on the upside. The consolidation was in the form of a re-test of the breakout.
The momentum indicator MACD has crossed the signal line, indicating the start of a trend. The RSI too is above its key 50 mark, indicating positive momentum on its side. We recommend a buy in PVR on dip towards Rs 1,850-1,820 with a stop loss of Rs 1,770 with a target of Rs 1,950-2,100.
Power Grid Corporation of India | Rating: Buy around Rs 185 | Target: Rs 205 | Stop loss: Rs 171 | Upside: 10 percent
After hitting the peak of Rs 212, the stock slipped around 16 percent from where chances of developing of demand are higher and prices took support from its 50 week SMA’s on the daily chart. As of now, the formation of cup and handle on the daily chart is giving cues to accumulate this stock at lower levels.
The RSI is also showing positive divergence, and currently, it took a turn on the north side. As long as it sustains above the Rs 184 mark, the possibility of moving on the upside is higher, and it can hit our target of with an ease. We suggest buying Power Grid around Rs 185 with stop loss of Rs 171 and target Rs 205.
Bajaj Auto | Rating: Buy around Rs 3,240 | Target: Rs 3,500 | Stop loss: Rs 3,100 | Upside: 8 percent
The scrip is undergoing consolidation in the longer time frame, and is on the verge of resuming its prior trend. The crucial resistance of the 100-DMA has been recently taken off, which indicated short term momentum to the uptrend.
The momentum indicator MACD has crossed the signal line which indicates the start of a trend. The RSI too is above its key 50 mark, which indicates positive momentum on its side. We recommend a buy in a Bajaj Auto stock around Rs 3,240-3,250 with a stop loss of Rs 3,100 and aim for a target of Rs 3,500.
(The author is Head of Technical Research at Narnolia Financial Advisors Ltd.)
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