Considering the bullish bias with continuation in higher highs, higher lows formation for six days in a row and support-based buying for yet another session, experts expect the Nifty50 to touch 21,000 mark for the first time in the coming days, with support at the 20,700 levels, but on the other side, also advised to keep an eye on momentum indicator RSI (relative strength index) which is at (83) overbought levels, along with increasing volatility and breadth which was negative on December 5.
On December 5, the benchmark indices ended at fresh record closing high. The Nifty50 soared 168 points to 20,855, and the BSE Sensex was up 431 points at 69,296, while the Nifty Midcap 100 and Smallcap 100 indices underperformed benchmarks, rising 0.5 percent and 0.1 percent respectively.
Stocks that performed much better than broader markets included Power Grid Corporation of India, IDFC First Bank, and JK Paper. Power Grid Corporation of India has seen a decisive breakout of slightly downward sloping resistance trendline adjoining multiple resistance points, and formed robust bullish candlestick pattern on the daily scale. The stock jumped 4.4 percent to Rs 222 on the NSE and traded above all key moving averages (20, 50, 100 and 200-day EMA - exponential moving averages) with strong volumes.
IDFC First Bank has also seen a horizontal resistance trendline breakout adjoining multiple resistance points and climbed 2.65 percent to Rs 89.25. The stock has formed bullish candlestick pattern with upper shadow on the daily charts, with above average volumes, while with Tuesday's upmove, it traded above all key moving averages.
JK Paper, too, has seen decisive breakout of horizontal resistance trendline breakout adjoining multiple resistance touchpoints and traded well above all key moving averages. The stock surged nearly 7 percent to Rs 394 and formed robust bullish candlestick pattern after several days of consolidation, with significantly higher volumes.
Here's what Om Mehra of SAMCO Securities recommends investors should do with these stocks when the market resumes trading today:
Following a substantial consolidation, JK Paper showcases a breakout with notable volume, engulfing November's entire candle range. Sustaining above the 50-day simple moving average (SMA), the stock exhibits RSI (relative strength index) recovery, currently placed at 63.
The price ascent signals renewed market interest and potential upward momentum bolstered by robust volume participation.
Hence, based on the above technical structure one can initiate a long position at Rs 394.30. However, on the safer side, it is advised to enter the counter near Rs 385-390 levels to enter, for the target price of Rs 418. Stop-loss can be kept as Rs 375.
The stock is forming higher high and higher low formation in the daily chart. The stock is trading above 20 and 50 DMA, indicating strength in price action. Also, positive crossover is indicated in MACD (moving average convergence divergence) while RSI stands at 62 levels.
The price is holding above 89 levels, which was previously its resistance, indicating buying interest among short-term traders.
Hence, based on the above technical structure, one can initiate a long position at Rs 89.55, for the target price of Rs 96, and stop-loss at Rs 85.
Power Grid Corporation of India
Trading at Rs 222.30, Power Grid exhibits a robust breakout, surpassing the crucial Rs 215 resistance with significant volumes. The stock rose taking support of 20 SMA. A positive crossover in the Stochastic daily indicator enhances the bullish outlook.
Any dip in the stock can be accumulated in tranches for the long term as the weekly chart indicates Rs 210 zone as a solid support. Additionally, the power sector is in flavour and may continue to scale up in the coming weeks.
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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