The benchmark index is just a few points away from the recent top of 11,341 which also happens to be the highest point of the rally started since March 2020.
Vinay Rajani
Nifty has been rising for the last five consecutive sessions. On August 11, it added 0.50 percent to its upswing and closed at 11,270.
The benchmark index is just a few points away from the recent top of 11,341, which also happens to be the highest point of the rally started since March 2020.
In the previous week, Nifty resumed its uptrend after finding support at 200-days SMA, placed at 10,880-odd level.
Nifty Auto, Metal and Pharma indices have taken the lead in the recent recovery. Nifty smallcap index has been rising for the last seven sessions on the trot.
So far in the month, NSE Midcap and Smallcap indices have outperformed the Nifty with a huge margin.
Nifty has got stiff resistance around 11,350, which is derived from the upward sloping trendline, adjoining the bottoms of October 2018 and September 2019 on the weekly and monthly charts.
The resistance of 11,350 is not that far from the current levels. The recent bottom of 10,882 is expected to act as further support. Immediate support comes in at 11,000.
Nifty is placed above its 5, 10, 20, 50, 100 and 200-DMA, which indicates a bullish trend.
Any level above 11,350 could result in further short-covering in Nifty, which could push the levels towards 11,500-11,550 immediately.
Bank Nifty has been trading in the range of 21,300-22,000. Breakout from this range would decide the trend for the Bank Nifty further.
Above 22,000, Bank Nifty could witness a sharp short-covering. Longs should be held with 21,300 stop loss.
On the intraday charts, the index has formed eve and eve double bottom at 21,300-21,400 levels, which indicates the chances of a bullish breakout.
The market is in the continuation of an uptrend. Remaining long with trailing stop loss would be the better strategy in the days to come.
Mid and small-caps from auto, auto ancillary, pharma and metals sectors should do well in the coming days.
Levels below 10,882 would confirm the bearish trend reversal for Nifty, but till then, the view should remain bullish.
Here are three buy calls for the next 3-4 weeks:
Sun Pharma | Buy | LTP: Rs 544.10 | Target price: Rs 600 | Stop loss: Rs 510 | Upside: 10%
The stock has broken out from the last six session's price consolidation with rising volumes.
In July, it confirmed the long-term downward sloping trendline breakout on the monthly chart.
The stock is placed above all important moving averages, indicating a bullish trend.
Tata Power | Buy | LTP: Rs 51.60 | Target price: Rs 57 | Stop loss: Rs 48.50 | Upside: 10%
The stock has broken out from the symmetrical triangle on the daily charts. For the last one month, it has been finding support on its 200-days EMA.
It has also surpassed the double top resistance placed at Rs 51.55 odd levels. Volumes have also gone up along with the price breakout.
Hindalco Industries | Buy | LTP: Rs 178.60 | Target price: Rs 194 | Stop loss: Rs 170 | Upside: 9%
The metal sector has been outperforming for the last two weeks. On August 5, the stock broke out from the bullish flag pattern on the daily chart.
For the last three sessions, the stock has been consolidating in a small range with bullish candles. The stock has been forming higher tops and higher bottoms on the daily and weekly charts.
(The author is Senior Technical and Derivative Analyst, HDFC securities)
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