Jigar S Patel lines up best bets as Nifty looks set to move towards 22,000

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The beginning of 2024 was marked by a significant event as the Nifty spot index reached a new high of 21,834 in the first trading session. Profit-taking took place at higher levels during the week, but there was some recovery in the last few sessions.

The volatility index decreased by over 12 percent and closed around the 12 mark. Overall, the sentiment was mixed throughout the week, with the index fluctuating within a narrow range and ending the week with minimal change. Throughout the week, the Nifty index experienced a decrease to a low of 21,500 before making a recovery.

Therefore, from a technical standpoint, as long as the index continues trading above 21,500, the overall trend remains strong. It would only be considered a trend reversal if the index falls below the 21,500 mark.

On the positive side, there is still potential for the index to reach the resistance level of 22,000, which is indicated by the rising trend line. Additionally, surpassing this level could result in a further rally towards 22,200-22,400 in the upcoming week.

Nevertheless, it is worth noting that the proportion of FII's index futures, classified as long versus short positions, remained around 70 percent in the previous week but has now declined to approximately 66 percent. Over the past 2-3 years, we have observed a temporary market peak occurring when this ratio reaches the range of 70 percent to 75 percent. According to the analysis, there is potential for further growth in the Nifty, but it is anticipated to be the final phase of the upward trend. Consequently, it is expected that there will be a significant amount of profit-taking in the markets.

Therefore, traders are advised to approach long positions cautiously and minimize their exposure. Additionally, it is recommended to implement strict stop-loss measures, particularly for small and mid-cap stocks, to mitigate possible losses. If the market breaches the 21,500 mark, it may indicate a temporary peak in the market.

The Nifty Bank index, like the benchmark index, reached a new high close to 48,600 before experiencing a swing low near 47,500 throughout the week. In the upcoming week, if the index closes below 47,500, there may be a corrective move. However, it is worth mentioning that the index could reach the significant 50,000 milestone.

Here's what Jigar S Patel of Equity Research recommends investors should do with these stocks when the market resumes trading today:

1. Aether Industries

Since a month or so, the counter has gained massive momentum from the retracement levels of its previous up move (0.786 percent), thus making it a lucrative buy. Having said that, time and price retracement are falling at the same length, which is a strong indication of bottoming out. (Time retracement is 0.382 percent and price retracement is 0.786 percent).

On the indicator front, the weekly Stochastics has formed bull divergence, which further confirms our bullish stance on the counter. Thus, one can buy in the zone of Rs 875–910 for a target of Rs 1015 and a stop-loss of Rs 832 on a daily closing basis.

NOTE: FOR BETTER UNDERSTANDING REFER TO THE CHART

2. Borosil Renewables

Since the last 2–3 months, the counter has been making higher highs and higher lows, which is a sign of positive momentum in the counter. Recently, on a daily scale, it has formed a bullish bat structure, which is looking attractive.

On the indicator front, daily stochastics has formed a bull divergence, which further adds to the bullish stance on the counter. Thus, one can buy in the zone of Rs 465–485 for a target of Rs 530, and the stop-loss would be Rs 445 on a daily closing basis.

3. HLE Glascoat

HLE Glascoat has been consolidating for some time in the zone of Rs 510–550. Recently, it has taken out its previous swing high of Rs 543, which is looking lucrative. On the indicator front, the daily scale RSI has given bullish divergence, which further adds to the bullish stance along with price action reversing from 0.886 percent retracement. Thus, we advised traders to go long in the range of Rs 555–570 with an upside target of Rs 625 and a stop-loss of Rs 530 on a daily close basis.

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.