Intermediate trend remains positive for both Nifty and Bank Nifty. Longs should be protected with trailing stoploss of 17,900 in Nifty and 40,000 in the Bank Nifty, says Nandish Shah of HDFC Securities.
Nandish Shah
October 26, 2021 / 08:18 AM IST
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Nifty broke the four-day losing streak on October 25 where it recovered more than one fifty points from the intraday low to end the day with the gains of ten points at 18,125 levels. Last week, Nifty made an all-time high at 18,604 and reversed south. From the all-time high, Nifty witnessed a fall of more than 600 points or 3.5 percent.
In the Options segment, we have seen Put writing at 17,800-18,000 levels. Previous swing top is placed at 17,947. This level also coincides with the 20-day EMA (exponential moving average) which is currently placed at 17,980 odd levels. On Monday, Nifty made a swing low of 17,968 levels and bounced back. So there are multiple evidences, which indicates strong support zone at 17,900-18,000 levels in the Nifty.
Bank Nifty continued its outperformance on Monday, gaining by 2.3 percent. Ratio chart of Bank Nifty over Nifty indicates that Bank Nifty would continue to outperform the Nifty for the coming weeks also.
Stocks making new 52-week highs from NSE500 has registered sharp fall, while stocks that are trading above their 200 DMA has also come down to 80 percent from the recent peak of 94 percent. This development indicates weak market breadth and does not auger well for the broader markets in a short term.
To conclude, we believe that Nifty has reached to a strong support of 17,900-18,000 levels. Intermediate trend remains positive for both Nifty and Bank Nifty. Longs should be protected with trailing stoploss of 17,900 in Nifty and 40,000 in the Bank Nifty.
Here are three buy calls for the next 2-3 weeks:
Blue Star: Buy | LTP: Rs 922.60 | Stop Loss: Rs 870 | Target: Rs 1,015 | Return: 10 percent
The stock price has broken out on the daily chart with higher volumes to close at highest level since April 5, 2021. Short and medium-term trend of the stock is positive where it is trading above its all-important short-term moving averages.
The stock price is forming bullish higher top higher bottom formation on the weekly chart. Daily RSI (relative strength index) is placed above 60 and on the rising mode indicating strength in the current uptrend of the stock.
Therefore, we recommend buying Blue Star at CMP of Rs 922 for the target of Rs 1,015, keeping a stop loss at Rs 870.
Orient Electric: Buy | LTP: Rs 337.80 | Stop Loss: Rs 310 | Target: Rs 380 | Return: 12.5 percent
After forming double bottom around Rs 310 odd levels, the stock price reversed northwards to close above its 5 and 20-day EMA. Stock price closed at one month high with higher volumes.
Oscillators like RSI and MFI (money flow index) is showing strength in the stock. Accumulation seen during last few months where volumes are higher during the up days as compared to down days. Once this accumulation is over, we are expecting stock to witness sharp up move.
Therefore, we recommend buying Orient Electric at CMP of Rs 338 for the target of Rs 380, keeping a stop loss at Rs 310.
Godrej Industries: Buy | LTP: Rs 576.50 | Stop Loss: Rs 545 | Target: Rs 635 | Return: 10 percent
The stock price is showing relative strength during last few days as stock price is hovering around current levels while midcap Index corrected 9 percent from all-time high. Primary trend of the stock is positive where it is trading above its 100 and 200-day EMA.
Accumulation was seen during last few days where stocks was witnessing buying at lower levels. Once this accumulation is over, we are expecting stock to witness strong up move. Therefore, we recommend buying Godrej Industries at CMP of Rs 575 for the target of Rs 635, keeping a Stop Loss at Rs 545.
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