The market had a strong week ended July 22, closing at more than two-and-a-half-month high with over 4 percent gains on the back of positive global trend, renewed buying interest at the FII desk, and easing commodity prices, including oil. After breaking out at the 16,000 levels, the Nifty50 did not look back, and crossed the 200-day exponential moving average of 16,521 in the middle of week, which also sustained in the later part of last week.
The index closed at 16,719.5 on Friday, the highest closing level since May 2, and has been making higher high higher low formation from the last five weeks on the daily charts, with bullish candlestick pattern formation on the daily as well weekly charts, while on the monthly charts, there was Bullish Engulfing kind of pattern formation.
The index has taken a support around its 30-31 percent Fibonacci Retracement level of up-move (from Covid lows to all-time high), which was placed at Rs 15,183 and since then it has seen upward move, barring intermittent correction.
Oscillators on the higher time frames indicated the sentiments are positive, but the lower timeframes (one hour and below) indicated negative sentiments which can be a sign of overbought and hence some setback can't be ruled out, especially after a 4 percent run-up last week and 10 percent rally from June lows, experts said.
On the levels, the next resistance for the index may be at 16,794, (the previous swing high point on June 3), followed by 16,946 and then 17,050 (200 days SMA), while the breakaway gap of 16,360-16,490 created during the last week can be act as a crucial support area, experts said.
"Going ahead, any decline towards this support is likely to get bought into. On the higher side, the recent swing high of 16,793 is very much within a touching distance now and soon we would see the benchmark index surpassing this as well. Slowly but steadily, we would see it eyeing its '200-SMA' (simple moving average) zone of 16,900 – 17,050 which would certainly be a sigh of relief for market participants," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One said.
He further said that although the undertone remains bullish, it's important to understand that the low hanging fruit is already gone and hence, it's advisable not to become too complacent; rather better to take one step at a time for a while.
A lot of thematic moves started doing well last week and hence, the pragmatic approach would be to focus on such potential movers which are likely to provide better trading opportunities, the market expert advised.
Here are top 10 trading ideas by experts for the next three-four weeks. Returns are based on the July 22 closing prices:
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities
L&T Finance Holdings: Buy | LTP: Rs 72.40 | Stop-Loss: Rs 69.8 | Target: Rs 78 | Return: 8 percent
After a short term correction, the stock has formed higher bottom formation. From last couple of weeks, the stock is hovering between Rs 70 to Rs 74 price ranges. However, the short term texture of the stock is still in to the positive side.
We are of the view that, as long as the stock is trading above 20 days SMA (simple moving average) Rs 70.50, the uptrend wave is likely to continue. Above which it could hit the level of Rs 78. Further upside may also continue which could lift the stock up to Rs 80.
PVR: Buy | LTP: Rs 1939.85 | Stop-Loss: Rs 1,870 | Target: Rs 2,070 | Return: 7 percent
In this month so far, the stock rallied over 5 percent. After a promising uptrend rally, the stock consistently taking support near Rs 1,875 level.
Technically, on daily charts it has formed higher bottom formation and comfortably trading above 20 days SMA (simple moving average). Unless it is trading below Rs 1,870, positional traders retain an optimistic stance and look for a target Rs 2,070. Fresh buying can be considered now and on dips, if any between Rs 1,935 and Rs 1,900 levels with a stop-loss below Rs 1,870.
HDFC Bank: Buy | LTP: Rs 1,392.50 | Stop-Loss: Rs 1,350 | Target: Rs 1,485 | Return: 7 percent
After a short term correction, the stock took the support near 50 days SMA or Rs 1,350 and bounced back quickly. In the last week, from the weekly lowest level it rallied over 4 percent.
It also formed long bullish candle which suggesting strong possibility of further upside from the current levels. Looking at the overall pattern it offers buying opportunity for the positional traders with a decent risk-reward ratio. The trend reversal move is likely to continue up to Rs 1,485.
Nandish Shah, Senior Derivative & Technical Analyst at HDFC Securities
Suprajit Engineering: Buy | LTP: Rs 358.4 | Stop-Loss: Rs 340 | Target: Rs 380-400 | Return: 12 percent
The stock price has broken out from the symmetrical triangle on the weekly chart. Short and medium term trend of the stock is positive as it is trading above its important moving averages.
Momentum oscillators – RSI (11) and MFI (money flow index - 10) have placed above 60 and sloping upwards, indicating strength in the current uptrend of the stock.
Plus DI is trading above Minus DI while ADX line has crossed 25 levels, indicating momentum in the current uptrend.
Action Construction Equipment: Buy | LTP: Rs 227.55 | Stop-Loss: Rs 216 | Target: Rs 240-255 | Return: 12 percent
The stock price has broken out on the daily line chart where it closed at highest level since May 2. The stock price has broken out from the downward sloping trendline, adjoining the highs of April 22 and July 7.
Trend of the stock is positive as it is trading above its important moving averages. Plus DI is trading above Minus DI while ADX line is placed above 25, indicating stock is likely to gather momentum in the coming days.
Ruchit Jain, Lead Research at 5paisa
Bharat Forge: Buy | LTP: Rs 706.6 | Stop-Loss: Rs 682 | Target: Rs 748 | Return: 6 percent
After the recent corrective phase, the stock has recovered gradually from its swing lows and has now given a breakout from a falling trendline resistance on the weekly charts.
The volumes along with the price upmove are rising and the ‘RSI Smoothed’ oscillator is also hinting at a positive momentum.
Hence, traders can look to buy the stock in the range of Rs 706-702 for potential targets of Rs 735 and Rs 748 in the near term. The stop-loss should be placed below Rs 682.
Polyplex Corporation: Buy | LTP: Rs 2,367.5 | Stop-Loss: Rs 2,220 | Target: Rs 2,650 | Return: 12 percent
In the recent corrective phase, the stock has managed to hold above its 200-day EMA support and prices have now resumed the positive trend. The volumes along with the prices upmove are good and the momentum indicators are also hinting at a positive momentum.
The 5 days EMA (exponential moving average) has given a positive crossover above the '20 DEMA' which signals a short term uptrend.
Thus, traders can look to buy the stock in the range of Rs 2,370-2,360 for potential targets of Rs 2,520 and Rs 2,650 in the near term. The stop-loss for short positions can be placed below Rs 2,220.
Jatin Gohil, Technical & Derivative Analyst at Reliance Securities
JK Cement: Buy | LTP: Rs 2,332.5 | Stop-Loss: Rs 2,135 | Target: Rs 2,720 | Return: 17 percent
After a higher level of reversal, again the stock tested its 50-month EMA and witnessed a smart recovery. In the past, the stock resumed its up-move after testing that moving average.
We believe the history will repeat itself, as the key technical indicators reversed from the oversold zone on medium-term timeframe chart and positively poised.
This could lead the stock towards its point of polarization, which is placed at around Rs 2,720.
Mphasis: Buy | LTP: Rs 2,276.45 | Stop-Loss: Rs 2,065 | Target: Rs 2,700 | Return: 19 percent
Since late-June 2022, the stock oscillated around its 50 percent Fibonacci Retracement level of prior up-move (Rs 630-3,660), which was placed at Rs 2,145. On week ended July 22, the stock breached its prior weekly falling trend and bounced.
The key technical indicators are in favour of the bulls on medium-term as well as short-term timeframe charts. On the higher side, the stock may face hurdle around Rs 2,380.
A stable move above that hurdle will take the stock towards Rs 2,475-2,550-2,700 in the short-term. In case of any decline, the stock will find support around its prior swing low, which is placed at around Rs 2,065.
Kotak Mahindra Bank: Buy | LTP: Rs 1,827.1 | Stop-Loss: Rs 1,760 | Target: Rs 1,925 | Return: 5 percent
The stock is in the strong up-trend, as it again reversed after testing its 38.2 percent Fibonacci Retracement level of prior up-move (Rs 1,712-1,852). In the past, the stock extended gain after testing that level and moved towards its 100 percent Fibonacci extension mark.
The key technical indicators are positively poised on short-term as well as near-term timeframe charts.
The stock has potential to move towards its 100 percent Fibonacci extension of prior up-move, which is placed at around Rs 1,925. On the lower side, the stock will find support around Rs 1,760, where its 20-day and 50-day EMAs are placed.
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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
