By Om Mehra, technical analyst at SAMCO Securities
Elevated volatility triggered profit-taking in Tuesday's market, where Nifty underwent alternative and significant bouts of rise and fall, leaving both bulls and bears puzzled. Nifty closed the day at 22,335.70, eking out a marginal gain on March 12. Notably, major sectors ended in the red while the IT sector was the sole sector to end in green. The market exhibited an erratic pattern with small candles rising and larger candles falling, raising concerns for future trends.
Nifty managed to conclude just above the psychological support of the 20 SMA, while the RSI (relative strength index) remained below the 60 level, indicating a fall in momentum. However, large-cap participation helped to support the index during the downturn.
Bank Nifty remained fragile once again, closing at 47,282.40 with a 0.10 percent decline, extending its lower trend for the third consecutive day. The PSU Bank sector showed weakness, however heavyweight HDFC Bank provided some support.
Bank Nifty is holding the middle Bollinger band and any potential dip below 46,800 levels would intensify the further weakness. Next support remains at 46,200 level while resistance is placed at 47,800.
Here are three buy calls for short term:
Hindustan Petroleum Corporation: Buy | LTP: Rs 514 | Stop-Loss: Rs 495 | Target: Rs 548 | Return: 6.6 percent
The stock has undergone a consolidation phase for several weeks but is now displaying renewed momentum establishing a strong base in a larger time frame and trading above 50 DMA (days moving average), indicating strength in price action.
Also, a positive crossover is indicated in MACD (moving average convergence divergence) while RSI stands at 50 levels.
Price is sustaining above Rs 505 level with decent volumes pointing out buying interest among the short-term traders.
Hence, based on the above technical structure, one can initiate a long position at CMP of Rs 514 for a target price of Rs 548. The stop-loss can be kept at Rs 495.
JSW Energy: Buy | LTP: Rs 509 | Stop-Loss: Rs 490 | Target: Rs 545 | Return: 7 percent
The stock reveals a strong recovery after a notable consolidation, forming a sturdy base supporting a rising trendline. The stock is currently trading above the 50 DMA indicating positive momentum. The daily chart reveals volume is ticking up with price rise. The RSI is gradually inching higher indicating bullishness in the stock.
Hence, based on the above technical structure, one can initiate a long position at CMP of Rs 503 for a target price of Rs 545. The stop-loss can be kept at Rs 490.
Poonawalla Fincorp: Buy | LTP: Rs 472 | Stop-Loss: Rs 450 | Target: Rs 508 | Return: 8 percent
The stock has formed a strong base after a decent correction. In the last two trading sessions, the stock has recently surged from its support zone with substantial volume. The RSI's recovery from the 40 level to around 53 indicates strength in price action.
The stock is holding above the 20-day simple moving average (SMA). The Bollinger bands have contracted hinting at reduced volatility and a potential breakout above Rs 482 could further intensify the buying interest.
Hence, based on the above technical structure, one can initiate a long position at CMP of Rs 479 for a target price of Rs 508. The stop-loss can be kept at Rs 450.
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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