The Nifty saw its longest losing streak, and it has slipped below its 200-DMA (day moving average). However, the market is looking extremely oversold in the near term because the long exposure of FIIs in index futures stands at a multi-month low of 15 percent, the Put/Call ratio is at 0.67, and the reading of the RSI (relative strength index) on the daily chart is at 30.
Therefore, we can't rule out a short-covering bounce in the market. On the upside, 17,450 is an immediate hurdle, and then 17,625 and 17,750 are the next hurdles. On the downside, 17,130 is an immediate support level, while 16,800 is a major support for the Nifty.
Bank Nifty is showing signs of bottoming out, as we can observe a double bottom formation with a Bullish engulfing candlestick formation near its 200-DMA on Monday. On the upside, the 20-DMA around 41,000 will be an important hurdle. On the downside, 39,400 is a key support level.
Here are three buy calls for next 2-3 weeks:
PNB Housing Finance: Buy | LTP: Rs 597 | Stop-Loss: Rs 560 | Target: Rs 675 | Return: 13 percent
The counter has been creating higher highs and lower lows continually, and it recently broke over important horizontal resistance at Rs 595, which could signal the beginning of a new expansion phase.
On the daily chart, we can see a bullish Cup and Handle formation, however, on the higher time frame, there is a rounding bottom formation.
With instant support at its 20 DMA (Rs 571), it is beautifully respecting its 50-DMA (Rs 553). The RSI momentum indicator is maintaining a positive bias at a level of 50.
ABB India: Buy | LTP: Rs 3,217 | Stop-Loss: Rs 3,000 | Target: Rs 3,550 | Return: 10 percent
After breaking out of a broadening wedge formation, the counter is moving towards a new record high. The overall capital goods market is buzzing, and ABB is currently trading above all of its significant moving averages after forming a solid base above its 200-day moving average (Rs 2,853).
On the upside, Rs 3,550 is a potential target level, with Rs 3,300 and Rs 3,450 acting as intermediate barriers. It is now respecting its 20-DMA (Rs 3,075) as an immediate support level.
The momentum indicators are all positively poised and suggest a strong bullish trend.
Lemon Tree Hotels: Buy | LTP: Rs 78 | Stop-Loss: Rs 72 | Target: Rs 88 | Return: 13 percent
The counter has established a solid base at Rs 72 level and is now poised to break out of a triangular formation upward, which might spark new bullish momentum.
With a bullish bar and strong volume, it was able to close above its 200, 100, and 20-DMAs. However, the 100-DMA near Rs 83 will be an immediate obstacle; above it, we may anticipate a rise towards Rs 88 and Rs 93 levels.
While MACD (moving average convergence divergence) is poised to cross the centerline to the upside, the momentum indicator RSI is exhibiting a bullish divergence with a positive crossover.
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