Hot Stocks | Here's why Voltas, LIC Housing Finance and Polycab India are short-term buys

Nifty has been consolidating for the last three consecutive sessions.

The shadows of the candles formed in the last three sessions have been long with a relatively low body, which indicates that there is a tug of war going on between bulls and bears.

On November 2, Nifty ended almost flat at 11,653 while Bank Nifty surged 4 percent, outperforming Nifty with a huge margin.

Bank Nifty closed at the highest level of the recent upswing and this is also the highest level for Bank Nifty since March 13, 2020.

Looking at the recent move, Nifty seems down but not out. The 8-day EMA is still placed above 21 days EMA, indicating the short-term trend is still on the upside.

Rate sensitive sectors like Banking, Financials and Real Estate have been outperforming in the recent past.

Sectors like IT, Pharma and FMCG have fallen. Nifty Midcap Index has not been showing any directional move for the last two months.

Daily ADX for Nifty is continuously trading below the equilibrium line, which indicates that the market has lost momentum since September 2020.

The Indian market seems to be waiting for the outcome of a big event - the American presidential election.

US S&P 500 index has witnessed a fall of 9 percent from the recent high made on October 12, 2020. The index is near long-term 200 moving average support, placed 3 percent away from the current levels.

A close below this average in S&P 500 would be considered bearish and it would have a negative impact on other world market indices as well.

It is very important that the S&P 500 index remains above 3,190 odd levels pre and post the US election results, otherwise, the medium-term trend would turn bearish.

The existing trend of the Nifty index is directionless and recent short-term swings have been choppy.

However, looking at the Bank Nifty and Real Estate index charts, it seems that rate-sensitive sectors would continue to perform well in the coming days too.

The levels of 11,750 is a short-term resistance above which, Nifty could resume its uptrend.

Short-term support for Nifty is seen at 11,500 odd levels, below which Nifty could extend the losses towards 11,406 and 11,260 levels, which happens to be the 50 percent and 61.8 percent retracement of the upswing seen from 10,790 (swing low of September 24) to 12,025 (swing high of October 15).

Here are three buy calls for the next 2-3 weeks:

Voltas | LTP: Rs 720.75 | Target price: Rs 771 | Stop loss: Rs 687 | Upside: 7%

The stock has closed at the highest level since February 19, 2020. The short-term moving averages have been above the medium to long-term moving averages.

The stock is close to registering a new all-time high above Rs 735.

Indicators and oscillators have been showing strength on the daily and weekly charts.

LIC Housing Finance | LTP: Rs 297 | Target price: Rs 321 | Stop loss: Rs 283 | Upside: 8%

The NBFC sector has been outperforming for the last couple of weeks.

The stock has been forming a complex inverted head and shoulder pattern and is on the verge of breaking out from the neckline on the daily chart.

For the last 10 consecutive weeks, the stock has been consolidating in a narrow range. Any close above Rs 310 would result in a medium-term breakout on the charts.

Polycab India | LTP: Rs 914 | Target price: Rs 1,010 | Stop loss: Rs 850 | Upside: 10.5%

The stock has been correcting for the last five trading sessions. The correction seems to be a retracement in the overall uptrend.

In the period of October 21-26, the stock surged from Rs 805 to Rs 975. After this big move which happened with higher volumes, the stock went into correction mode.

The recent correction should be considered as a buying opportunity as the stock has reached above its 50, 100 and 200-day EMA.

(The author is a technical research analyst at HDFC Securities)