Last week's trading on the D-Street proved to be a roller coaster ride for investors. Initially, the benchmark indices faced significant pressure, particularly with the Nifty 50 breaching the support level of 22,000 and nearly testing the 21,700 mark. However, a notable recovery ensued during the later half of the week, facilitating a swift bounce-back. Despite the turbulence, the index managed to close above the crucial 22,000 mark, thanks to a sharp pullback.
From a technical standpoint, the Nifty spot index retraced to its 50-day exponential moving average (DEMA) and exhibited a bullish Harmonic Shark pattern near the 21,750 level, resulting in a substantial bounce of over 400 points from its lows.
Currently, there are indications of a Morning Star candlestick pattern forming on the daily chart, alongside an Inverse Head and Shoulder breakout on the hourly chart of the Nifty spot. Therefore, as long as the support level of 21,700 holds, a buy-on-dips stance is advisable. However, a breach of 21,700 could potentially lead the index towards the 21,600 – 21,500 range, corresponding to the placement of the 100-day DEMA.
On the upside, the levels of 22,200 – 22,450 are anticipated to pose strong resistance in the current week starting from March 26. Notably, the current week is truncated with only three trading sessions, and there's a breakout in the USDINR pair, causing the INR to trade at an all-time low. These factors are expected to contribute to heightened volatility in the market during the coming week.
The Nifty Bank index has recently reversed direction from the rising trendline, coinciding with the placement of the 100-day exponential moving average (DEMA). Looking ahead to the current week, breaching the level of 45,800 could be pivotal for the index's performance. On the upside, a significant obstacle lies at the 48,000 mark, and only a breakthrough beyond this level might empower the index to outpace the benchmark indices, indicating a potential shift towards stronger performance in the market.
Here are three buy calls for the next 2-3 weeks:
Borosil Renewables: Buy | LTP: Rs 523.60 | Stop-Loss: Rs 475 | Target: Rs 600 | Return: 14.6 percent
After surging to its peak near Rs 670 mark on February 1, 2024, Borosil Renewables has undergone a notable downturn, witnessing a substantial decline of around 28 percent. However, over the subsequent 26 trading sessions, Borosil Renewables has demonstrated resilience, avoiding further downturns and instead consolidating within a range spanning from Rs 480 to Rs 515.
From a technical perspective, there's been the formation of a bullish AB=CD pattern evident on the daily chart of Borosil Renewables within this specified price range of Rs 480-515. Interestingly, this range aligns with the 0.618 percent retracement level of a price swing observed between October 2023 and January 2024, as depicted on the chart.
Moreover, on the daily scale, the relative strength index (RSI) has surpassed its bearish trendline, indicating a potentially attractive buying opportunity.
Consequently, it may be prudent to consider buying within the range of Rs 510-525, targeting an upside of Rs 600, while setting a stop-loss near Rs 475 on a daily closing basis.
Coal India: Buy | LTP: Rs 432 | Stop-Loss: Rs 408 | Target: Rs 465 | Return: 7.6 percent
Following a peak near Rs 465 mark on March 7, 2024, Coal India underwent a notable decline of approximately 12 percent. However, from a technical perspective, a bullish AB=CD pattern has emerged on daily chart of Coal India within the price range of Rs 410-420. Remarkably, this range aligns with the 0.50 percent retracement level of a price swing observed between January 2024 and February 2024, as depicted on the chart.
Furthermore, a bullish cross has been observed on the 2-hourly Stochastic indicator, signaling a potentially attractive buying opportunity. Consequently, investors may consider initiating long positions within Rs 420-435 zone, targeting an upside objective of Rs 465.
It's advisable to set a stop-loss near Rs 408 on a daily closing basis to manage downside risk effectively.
Bajaj Finance: Buy | LTP: Rs 6,761 | Stop-Loss: Rs 6,350 | Target: Rs 7,400 | Return: 9.5 percent
Bajaj Finance experienced a significant decline near Rs 8,200 mark on October 6, 2023, shedding around 2,000 rupees. However, it stabilised within a range of Rs 6,400 to Rs 6,600, avoiding further declines. During the previous week, there was significant buying interest and substantial trading volume.
A bullish AB=CD pattern appeared on the daily chart, aligning with the 0.618 percent to 0.707 percent retracement levels of a price swing between March and October 2023.
The daily stochastic indicator formed a bullish divergence, signaling a potential buying opportunity. Thus one can buy in the zone of Rs 6,600-6,800 with an upside target of Rs 7,400 and a stop-loss would be placed near Rs 6,350 on a daily close basis.
The author is senior manager - equity research at Anand Rathi.
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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