Rohan Patil
We have been witnessing strong volatility for the last couple of days. On June 10, Nifty remained in the range of 10,050 -10,150 and finally closed near the high of the day.
Nifty50 is trading in a rising channel pattern and has tested its long-term moving average (100-days SMA) at the start of the week continuing its prior uptrend.
After a straight rally of almost 1,000 points, the market is likely to take a breather and profit-booking from the current level cannot be ruled out.
The overall index continues to hold above its all exponential moving averages (21, 50, and 100) on a daily time frame, which holds our positive outlook to 10,550 levels.
Market breadth remained in favour of bulls. There was a couple of gainers to one loser by the end of the day.
In case the index violates the 9,900 level, a sharp decline will take place. This could drag the index to test the gap levels it left in the last week of May near 9,550–9,600 levels.
On the flip side, the rising channel pattern in Nifty is likely to cap near 10,550 levels.
Two back-to-back strong weekly gains indicate Bank Nifty has shifted its gear up and is looking positive to continue the current momentum.
More than 15 percent gain in two weeks clearly shows the outperformance of the banking index over the Nifty50.
Meanwhile, the MACD indicator is likely to reverse and seems to have bottomed out for the short-term on a weekly scale for the banking index.
We remain positive on Bank Nifty with higher targets of 22,500 for the coming weeks. On the downside, initial support is placed at 20,000 level which is supported by a 21- day exponential moving average on the daily chart.
Here are three buy recommendations for the next 3-4 weeks.
Indian Bank | Buy | LTP: Rs 55.95 | Target price: Rs 65 | Stop loss: Rs 50 | Upside: 16%
Indian Bank, on the daily chart, has witnessed Rectangle pattern breakout and is trading above the trendline support.
Momentum oscillator RSI (14) is reading above 60 levels on the daily chart with positive crossover on the cards.
However, for the last few days, prices have been consolidating within a range of 21 and 50-day exponential moving average that is placed in the range of Rs 52 and Rs 47, respectively.
In the previous three trading sessions, the stock has broken its moving average range on the higher side, which is positive for the counter.
Traders can accumulate the stock in the range of Rs 55 - 56.
United Spirits | Buy | LTP: Rs 609.65 | Target price: Rs 675 | Stop loss: Rs 570 | Upside: 11%
United Spirits, on the daily chart, is trading in higher top higher low formation.
After a mild consolidation, the stock seems to be getting ready for a fresh breakout. Positive moving averages crossover and short-term range breakout suggest that the stock is poised for a short-term rally.
RSI and other momentum indicators are trading in a positive zone.
Traders can accumulate the stock in the range of Rs 605 - 611.
After witnessing a breakout of a Symmetrical Triangle pattern, prices have been consolidating above its trendline support on a daily timeline.
Currently, prices are trading above its smaller degree trendline support, looking to accelerate higher on the daily chart.
Momentum oscillator RSI (14) is reading above 55 levels on the daily chart with positive crossover on the cards.
Prices are trading near a two-week high, currently sustaining above 21 and 50-days exponential moving average on a daily scale.
Traders can accumulate the stock in the range of Rs 1,327-1,338.
(The author is Technical Analyst at Bonanza Portfolio)
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