Buy these two stocks for near-term gains; Nifty consolidating after breakout above 16,000

Given that the Nifty has broken out of a 500 point range last week, upside target implications for the coming weeks are at 16500.

By Subash Gangadharan

The Nifty continues to consolidate in a range for the last few sessions after breaking out of the 15451-15962 trading range last week. On the daily chart, the Nifty continues to hold above a rising trend line that has held the important lows of the last few months. The index also continues to trade above the 20 and 50 day SMA.

Given that the Nifty has broken out of a 500 point range last week, upside target implications for the coming weeks are at 16500. Short term trend reversal levels are at 16105.

The below picks are for the next 15-26 trading sessions

Buy Tata Chemicals  

Tata Chemicals has shown relative strength this week. While the Nifty index has gained marginally, this stock has surged higher by 4.4%. In the process, the stock has also closed at a new life high, thereby continuing its intermediate uptrend.

Technical indicators are giving positive signals as the stock trades above an upward sloping 20 week and 50 week SMA. Daily momentum indicators like the 14-day RSI have bounced back and are in rising mode now, which augurs well for the uptrend to continue.

With the intermediate technical setup too looking positive, we believe the stock has the potential to move higher to new life highs in the coming weeks and therefore recommend a buy between the 858-862 levels. CMP is 860. Stop loss is at 800 while targets are at 980.

Buy Vedanta

Vedanta has broken out of a 7-day trading range on Wednesday on the back of above-average volumes. In the process, the stock has also closed at a 52 week high.

Technical indicators are giving positive signals as the stock trades above the 20 day and 50 day SMA. Daily and weekly momentum indicators like the 14-day and 14-week RSI are in rising mode and not extremely overbought, which is encouraging.

With the intermediate technical setup looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 323-325   levels. CMP is 324.45. Stop-loss is at 300 while targets are at 375.