Nifty is trading above its three major simple moving averages 20-DMA, 50-DMA and 200-DMA that are placed between 10,830 and 10,870. This suggests a validated up move is in progress and strong support exists on the lower side
Nifty traded with positive bias throughout the last week and managed to close above major hurdle of 10,985. It has also closed above the psychological level of 11,000.
The recent rally was supported by PSU banks, auto and metal sector. Bullish crossover in MACD indicates positivity in Nifty; an increasing histogram of MACD on the daily chart is also indicating bullishness in the index.
The market has given the highest weekly closing since Oct- 2018 suggesting bulls have upper hand in the current rally, also RSI has given breakout after four months.
Interestingly, the index is trading above its three major simple moving averages 20-DMA, 50-DMA and 200-DMA that are placed between 10,830 and 10,870. This suggests a validated up move is in progress and strong support exists on the lower side. Middle regression line of linear regression channel is also placed around 10,875.
Sustained trade above previous months’ high placed around 11,118 will accelerate the up move, which can take the index higher towards crucial resistance zone of 11,250-11,300. However, the majority of the short-term oscillators are in an overbought zone that can lead to some profit booking. Moreover, a close below the strong support (10,870) will push prices lower towards 10,750.
Bank Nifty: Banking index is trading above all its major important moving averages justifying uptrend is in progress. Recently, Bank Nifty has given a symmetrical triangle breakout around 27,350, which can push prices higher towards 28,300.
ITD Cementation India | Rating: buy around Rs 119 | Target: Rs 145 | Stop loss: Rs 105 | Upside: 22 percent
After hitting the peak of Rs 234, ITD Cementation slipped at lower levels from where it rebounded sharply as prices took support from the previous support on the daily chart. As of now, it has been running on the lower base of falling channel line on weekly chart, which is giving cues to accumulate this stock at lower levels.
On the other side, RSI has been following positive trajectory from last few days and currently it has indicated a steep rise. As long as it sustains above Rs 105, possibility of moving on upside is higher and it can hit our first target of Rs 145 with an ease. We recommend buying the stock around Rs 119 with a stop loss of Rs 105 and a target of Rs 145.
Punjab National Bank | Rating: Buy around Rs 80 | Target: Rs 95 | Stop loss: Rs 71 | Upside: 19 percent
The stock has witnessed a decent correction recently from the peak of Rs 124 and now has shown indication for the formation of Inverse H&S pattern. RSI has been following a positive trajectory from last few days and currently, it has indicated a steep rise and it has the potential to rise further in the coming days.
Stochastic is also looking firm lending support to price action. With the chart looking attractive and decent volume participation witnessed, we recommend buying PNB around Rs 80 for an upside target of Rs 95, with a stop loss at Rs 71.
Tata Motors | Rating: Buy around Rs 178 | Target: Rs 210 | Stop loss: Rs 162 | Upside: 18 percent
Stock bottomed near Rs 129-135 and has been consolidating for last few days on the daily chart. The emergence of green candles near the support line on the daily chart indicates up side movement in the coming sessions.
Daily momentum indicator, RSI seems to be turning northward while forming positive divergence on daily chart that is creating positive rhythm in the scrip. Furthermore, Bullish crossover in MACD adds the conviction of buying the scrip around Rs 178 for the target of Rs 210 with stop loss of Rs 162.
Yes Bank | Rating: Buy around: Rs 222 | Target: Rs 260 | Stop loss: Rs 202 | Upside: 17 percent
Yes Bank has confirmed the reversal after the formation of bullish belt hold from its current downtrend. It formed a double bottom price pattern and started consolidating near the neckline which is positive for the scrip. Sustainability of price above 20-DMA indicates positive bias.
The declining histogram in MACD with bullish crossover suggest upside move in the coming sessions. As long as it sustains above Rs 202, the possibility of moving on upside is higher and it can hit our target of Rs 260 with an ease. We suggests to buy Yes Bank around Rs 222 with stop loss of Rs 202 for target of Rs 260.
Mahindra & Mahindra | Rating: Buy around Rs 665 | Target: Rs 703 | Stop loss: Rs 643 | Upside: 6 percent
The stock has been an underperformer throughout 2018 and was trading in a sloping channel with lower high and lower lows on the monthly chart. However, for the past few weeks, supply is looking diminished due to the formation of hammer at lower levels. It has managed to hold above 20-DMA and declining histogram in MACD on weekly chart suggest upside swing in coming days.
The positive divergence in RSI on the daily chart also suggests that prices may move further on upside in the coming weeks. Hence, the investor should accumulate the stock around Rs 665 with stop loss at Rs 643 for the target of Rs 703.
The author is Head-Technical & Derivative Research at Narnolia Financial Advisors.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.