The index is likely to continue to head higher and it may scale up towards 10070-10140 in the coming week, Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities said in an exclusive interview with Kshitij Anand of Moneycontrol.
Q) It has been a good week for traders, Nifty rose nearly 200 points. Where is the market headed in the coming week?
A) The Nifty50 gained 191 points on the weekly basis. The market witnessed buying action in largecap and midcap space. The index is likely to continue to head higher and it may scale up towards 10070-10140 in the coming week.
Q) Translation of weekly charts and monthly charts and its implication.
A) Since the past 3-4 months, the index is consolidating within a broad range of 10180-9685 levels representing a sideways trend. On the weekly chart, the index has formed a ‘Bullish’ candle with a long lower shadow indicating buying at lower levels.
The Nifty50 managed to surpass 50 percent retracement of recent fall (10178-9687). The Nifty managed to reclaim above 50-days moving average (DMA) and 100-DMA which indicates a gain in strength.
If the index crosses above 10,000 level next week then it would witness buying which would take the index towards 10,070-10,140 in the near term.
Q) What should be the strategy for investors in the coming week – buy on dips, sell on rallies?
A) The daily strength indicator Relative Strength Index (RSI) and momentum oscillator Stochastic have both positive and are above their respective reference lines indicating positive bias. Buying on dips continues to be our preferred strategy.
On the lower side, 9945-9900 are likely to act as good support for any minor corrective action in the near term.
Q) Any stocks which are looking interesting based on technical parameters?
A) Here is a list of stocks which are looking attractive for the coming week. Jubilant FoodWorks, Bharat Forge, Petronet LNG, Bharat Financial, HCL Technologies looks bullish for near/short term
Jubilant Foodworks: BUY| Target Rs1635| Stop Loss Rs1500| Return 6%
On the daily chart, the stock managed to give a breakout of its consolidation range at Rs 1490 by giving a “Breakaway gap” and it is supported by strong volume.
On the weekly chart, stock manages to give a breakout of Flag pattern thus giving a probability of strong bullish trend in the near future.
The chart is in the higher top and higher bottom on the daily, weekly and monthly chart indicates sustained strength. One can buy the stock in a range of Rs 1545-1530 with a stop loss below RS 1500 and a target of Rs 1600-1635.
Bharat Forge: BUY| Target Rs685| Stop Loss Rs630| Return 5.8%
The stock decisively breakout from its consolidation range of (Rs 600-635) on the daily chart signals strength ahead. This breakout accompanied with high volumes which support increased participation.
The stock is forming a higher top higher bottom formation on the daily and weekly charts. The daily and weekly strength indicators RSI is in a positive zone indicate sustained uptrend. One can buy in a range of Rs 647-642 with a stop loss of Rs 630 and a target Rs 675-685.
Petronet LNG: BUY| Target Rs260| Stop Loss Rs236| Return 6.5%
The stock has formed a long bullish candle on the weekly charts which indicate buying interest throughout the week. The stock has managed to give breakout from last six-week consolidation range of (Rs 220-240) on the weekly closing basis.
The stock is forming a higher top and higher bottom formation on the daily and weekly charts which indicates sustained uptrend. Investors can buy Petronet LNG at Rs 244 with a stop loss of Rs 236 and a target Rs 256-260.