Once Nifty surpasses 12,300 resistance zones, it can march towards 12,500 and subsequently towards 12,600 levels which are near the rising trend line and upper band of Bollinger Band
Market witnessed high volatility last week though it hit a new high on January 10. Although the index has formed a bullish body candlestick pattern with big lower shadow on the weekly timeframe, selling pressure near the previous high (12,300) cannot be ruled out.
The rising histogram on MACD indicator and signal line trading above 0-line with bullish crossover is also supportive of the current bullish structure on the index. Nifty is continuously trading higher above all popular moving averages (20/50/100/200) DMA indicating strong bullish bias to continue further. At the same time 5 week DMA is standing near 12,190 levels and a decisive close below it will be an early sign of trend reversal.
On the other hand, once Nifty surpasses 12,300 resistance zones, it can march towards 12,500 and subsequently towards 12,600 levels which are near the rising trend line and upper band of Bollinger Band.
A lot of activity in FNO segment is seen, whereas the highest Open Interest (OI) in PUT is around 12,000 strikes and maximum Open Interest (OI) in CALL is around 12,500 levels suggesting trading range for the month is 11,800 and 12,500 marks.
Bank Nifty gave a sharp correction in the last week; buy managed to gave bounce back in the second half of the week. Banking index is trading near 5 DMA weekly, which is a caution sign and any decisive close below 31,800 will lead to some sell-off.
Parag Milk Foods | Rating: Buy around Rs 142 | Target: Rs 168 | Stop Loss: Rs 132 | Upside: 18 percent
The stock has broken the yearly long downward trend line and has now retested the same with the RSI pulling back to neutral zones, giving us a reason for a risk-reward favorable entry.
The momentum indicator MACD has crossed the signal line indicating the start of a long term trend. The momentum indicator Weekly RSI is also above its key Rs 60 marks indicating momentum on its side. We recommend a buy around Rs 142 with a stop-loss of Rs 132 and target of Rs 168.
Mahindra & Mahindra | Rating: Buy around Rs 538 | Target: Rs 565 | Stop Loss: Rs 519 | Upside: 5 percent
The momentum indicator MACD has crossed the signal line indicating a start of a trend. The RSI too is above its key 50 mark indicating positive divergence on its side. The stock is breaking out of a Cup & Handle price pattern with the weekly candle of bullish engulfing, one along with the formation of double bottom, all indicating bullishness going forward.
A decisive close above crucial resistance of the 20 SMA has been recently pushed prices upside. We recommend a buy in M&M around Rs 538 with a stop loss of Rs 519 for a target of Rs 565.
Hindustan Unilever | Rating: Buy around Rs 1,945 | Target: Rs 2,040 | Stop Loss: Rs 1,914 | Upside: 4.5 percent
This stock has taken the support of its lower band of a falling channel. It has been trading inside this pattern for many days. Moreover, bullish crossover in MACD also suggests a positive trend for the time being.
On the daily chart, the stock has given a breakout of its falling wedge pattern which suggests a robust upside movement in the counter. Based on the above technical structure, one can take a long position in the stock around Rs 1,945 with the stop loss of Rs 1,915 for the target of Rs 2,040.
(The author is Head of Technical Research at Narnolia Financial Advisors Ltd.)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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