Hot Stocks | Lupin and Bharat Electronics are two buy calls for the short term

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Nifty continued its uptrend for the week gone by to clock new records and end above 13,750.

The bulls seem to be reluctant to give up and hence, we have seen intraday dips getting bought into throughout last week.

Nifty is trading at an all-time high and although there’s no limit on the upside, reciprocal retracements usually indicate the point where the markets could resist.

If we observe positional charts and take retracements of the previous corrections, then 127 percent retracement of the previous correction from 12,430 to 7,511 comes around 13,770 and that is where Nifty is placed right now.

On the other hand, the RSI-smoothened oscillator is trading above the 95 mark on the daily chart, which is a highly overbought zone.

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Ruchit Jain

Equity Technical Analyst|Angel Broking

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Usually, when the momentum readings are in such an overbought zone and the market approaches resistance, it leads to either a price-wise or a time-wise correction in the short term.

Hence, we advise traders should avoid getting carried away now and avoid aggressive buying at the current levels.

In fact, booking profits on existing longs and taking some money off the table is recommended.

Having said that, one should not give less importance to the price structure, which has not yet given any signs of reversal.

For this week, the focus would be more on the price action and we would wait for indications from that front.

The banking index, which has resumed its rally and has outperformed in the last couple of months, has now been facing resistance around the 31,000 mark.

As far as Nifty levels are concerned, 13,770-13,800 is the immediate resistance as per the retracement theory mentioned above.

If the index moves beyond this range, it would eye the 14,000 mark for the first time ever.

On the flip side, 13,650 is the immediate support which if breached could result in some profit-booking and drag the index towards 13,500-13,470.

Here are two buy calls for this week:

Lupin | LTP: Rs 973.45 | Target price: Rs 1,020 | Stop loss: Rs 945 | Upside: 5%

After the recent corrective phase, the prices have formed a support base near their 200-day moving average.

In the last one month, the stock has formed a higher top higher bottom structure which indicates a resumption of the uptrend.

The momentum oscillators are in a positive zone indicating a positive structure. Nifty Pharma index too looks positive on the charts and thus, we believe this stock could rally higher in the near-term.

Bharat Electronics (BEL) | LTP: Rs 120.60 | Target price: Rs 133 | Stop loss: Rs 115 | Upside: 10%

This stock has recently seen an up-move supported by good volumes.

On the weekly charts, prices have given a breakout from a ‘Cup and Handle’ pattern which is a bullish pattern. The long-term chart structure, too, looks positive.

(The author is a senior analyst at Angel Broking)