Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities
Nifty ended in the red after a volatile trading session on September 28. The index closed below 200 day moving average (DMA - 16,987) for the first time after several days. The momentum oscillator RSI (relative strength index) is in a bearish crossover.
On the daily chart, the index has touched a low around the historical swing high. The trend is likely to remain weak as long as it remains below 17,000.
The index has witnessed significant amount of Call writing at higher levels and there has not been enough Put writing at the lower end to find a meaningful support on the derivative front. The uptrend will resume only once we close above the level of 17,100.
Here are three buy calls for next 2-3 weeks:
Dr Reddy's Laboratories: Buy | LTP: Rs 4,269.7 | Stop-Loss: Rs 4,000 | Target: Rs 4,500-4,600 | Return: 5-8 percent
Dr Reddy's Labs on the daily chart has been consolidating in a broad range between Rs 4,000-4,300 levels. The stock for the past few days is showing signs of strong buying with bullish candlestick formation confirming the base formation.
The stock is on the verge of a breakout from a falling trend line which will accelerate the move on the upside.
Asian Paints: Buy | LTP: Rs 3570.65 | Stop-Loss: Rs 3,400 | Target: Rs 3,700-3,740 | Return: 4-5%
The stock has given a breakout from a rounding bottom formation on the daily chart with rising volumes. The momentum oscillator RSI (relative strength index) has also given a positive crossover and surpassed the level of 60 which confirms the internal strength.
The MACD (moving average convergence and divergence) indicator has given a buy crossover from the zero line confirming the buy signal on another momentum indicator.
Max Financial Services: Sell | LTP: Rs 753 | Stop-Loss: Rs 790 | Target: Rs 710-700 | Return: 6-7%
The stock on the larger time frame, that is, the weekly chart, was trading in a strong downtrend with lower high and lower low formations intact.
The stock in Wednesday's trading session has given a fresh breakdown from a sideways trend which confirms bearishness in the near term.
The MACD also giving a negative crossover below the zero line confirms sell signal.
