Given the strong momentum with which the Nifty 50 decisively surpassed the 22,600 mark on April 29, negating the previous day's bearish Dark Cloud Cover pattern and holding all key moving averages, the index is likely to take a leap towards a record high of 22,776 in the upcoming trading sessions, with immediate support at 22,500, experts said while advising 'buy on dips' strategy.
On April 29, the Nifty 50 jumped 223 points to 22,643 and formed a long, bullish candlestick pattern on the daily charts, while the BSE Sensex climbed 938 points to 74,668, driven by banks. The broader markets continued the uptrend for the seventh consecutive session, but underperformed the benchmark indices as the Nifty Midcap 100 and Smallcap 100 indices gained 0.4 percent and 0.2 percent.
Stocks that outpaced the benchmark indices as well as broader markets included ICICI Bank, Supreme Industries, and BLS International Services. In the previous session, ICICI Bank was the star performer in the Nifty 50, rising 4.7 percent to end at a new closing high of Rs 1,160 and formed a robust bullish candlestick pattern on the daily charts with healthy volumes. The stock traded above all key moving averages now.
Supreme Industries has seen a strong breakout of falling resistance trendline adjoining highs of October 20 and December 5 last year, and rallied 14.2 percent to end at fresh closing high of Rs 4,955 on the NSE. In fact, it was the biggest gainer in the Nifty 500 index. The stock has formed very big bullish candlestick pattern after gap up opening, with significantly higher volumes, and traded above all key moving averages.
BLS International Services has also seen a downward sloping resistance trendline adjoining highs of February 1, and April 8, and formed long bullish candlestick pattern on the daily charts. The stock rallied 6.2 percent to Rs 350 with robust volumes and traded above all key moving averages.
Here's what Ashish Kyal of Waves Strategy Advisors recommends investors should do with these stocks when the market resumes trading today:
On the below chart, prices gave breakout of the upper bands of the Bollinger bands which is a positive sign. Also, prices have just given a close above the channel resistance. However, for confirmation about the breakout we need follow up buying.
In short, ICICI Bank looks bullish. Use dips as a buying opportunity with the target of Rs 1,185, while on the downside Rs 1,125 is the key support level.
Supreme Industries has been moving higher recently and intact in strong uptrend. Price has closed above Rs 4,750 level which confirms breakout of the rounding bottom pattern.
Along with this, KST (know sure thing) has turned above signal line and also trading above the zero line which is a positive sign. So, we can expect good momentum to continue in this stock.
In short, trend for this stock is positive. Use dips towards Rs 4,850-4,900 as a buying opportunity for a move towards Rs 5,450-5,500 levels as long as Rs 4,650 holds on the downside.
Looking at the daily chart, prices formed a triangle pattern. A breakout of the triangle pattern is expected. After breakout, we can expect a move towards important resistance which is near Rs 372 levels. The RSI (relative strength index) momentum indicator also trading above its median at 56.54 indicating bullish momentum for the stock.
In short, the overall outlook for BLS International is positive. A breach above Rs 353 can lift the price higher towards Rs 372-380 as long as Rs 339 holds on the downside.
Follow Ashish Kyal on Twitter - @kyalashish
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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