Next gap resistance for Nifty is placed at 10,334. Far resistance is seen around 10,550 level which is the 61.8 percent retracement of the entire fall seen from 12,430 to 7,511.
Nandish Shah
Nifty continued its northward journey for the second day in a row to close at 10,167 levels on June 8, highest since 11th March. Nifty has risen in eight out of the last ten days, gaining over 10 percent.
During the last week, Nifty convincingly crossed its previous intermediate highs of 9,889 touched on April 30, 2020.
The 14-day RSI reading above 60 and the 13-day SMA crossing above the 50-day SMA indicates a reversal of the recent intermediate downtrend and more upsides in the intermediate-term.
Next gap resistance for Nifty is placed at 10,334. Far resistance is seen around 10,550 level which is the 61.8 percent retracement of the entire fall seen from 12,430 to 7,511.
Earlier resistance of 9,889 levels would interchange its role as a support. In the derivatives also, we have seen Put writing at 9,900-10,000 levels. Therefore, 9,900-10,000 level would act as immediate support for the Nifty.
As Nifty has already risen more than 10 percent in the last 10 trading sessions, Nifty may move up gradually but the focus of the traders should be on the midcap stocks.
Nifty Midcap and Smallcap 100 Indices have already broken out on the daily chart during the last week.
However, Nifty Midcap and Smallcap Index are still down by 35 percent and 55 percent, respectively, from their respective highs of January 2018.
We believe that select mid-caps and small-caps that have been underperforming Nifty for the last two-and-a-half years can do well from hereon.
Our advice is to remain long in the Nifty with the stop loss of 9,889 levels. Resistance is seen at 10,334 and 10,550 level. We believe that mid-caps and small-caps will outperform the benchmark indices for the coming days.
Here are three mid-cap buy recommendations for the next 3-4 weeks:
New India Assurance Company | LTP: Rs 127 | Target price: Rs 140 | Stop loss: Rs 118 | Upside: 10%
After forming multiple bottoms around Rs 115 odd levels, the stock has broken out on the daily chart with higher volumes to close at three month's high.
Daily RSI oscillator (11) is placed above 60 levels, indicating a bullish setup for the stock. Plus DI is trading above minus DI, indicating bulls are having an upper hand.
MACD line is placed above the central line, Indicating a bullish setup. Insurance as a sector is looking good on the short-term charts.
Gujarat Alkalies | LTP: Rs 338.85 | Target price: Rs 370 | Stop loss: Rs 323 | Upside: 9%
The stock has broken out on the daily charts to close at the highest levels since May 13, 2020. The short-term trend of the stock is positive as the stock is trading above all its important moving averages.
Daily RSI oscillator (11) is placed above 60 levels Indicating bullish setup for the stock.
Plus DI is trading above minus DI, indicating bulls are having an upper hand.
Rallis India | LTP: Rs 251.20 | Target price: Rs 275 | Stop loss: Rs 230 | Upside: 9%
The stock has already broken out from the downward slopping trendline during the last week, adjoining the highs of Feb 20 and May 5, 2020.
The stock has also broken out on the daily line chart by closing above the multiple top resistance levels of Rs 245 with higher volumes to close at two year high.
The stock is trading above all its important short and medium-term moving averages.
Oscillators and momentum indicators like RSI, MFI and MACD are showing strength in the stock.
(The author is Technical Research Analyst at HDFC Securities)
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