Short-term trend remains positive for Nifty. Next upside target for Nifty is seen around 18,350 levels, followed by 18,600. Longs should be protected with stop loss of 17,780, says Nandish Shah of HDFC Securities.
Nandish Shah
November 16, 2021 / 08:25 AM IST
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After sharp gains on November 12, Nifty witnessed profit booking at higher levels on Monday where it corrected more than hundred points from the intraday high to close near Friday’s close.
However, the primary trend remains positive as Nifty is trading above its 5, 20 and 50 day EMA (exponential moving average). It has broken out from the downward sloping trendline, adjoining the highs of October 19 and November 9, 2021.
During the recent correction, Nifty took support at 10-week EMA and bounced back. Nifty has never closed below its 10-week EMA since May 2021, which is currently placed at 17,780 odd levels.
In the Option segment also, we have seen Put writing at 17,800-18,000 levels, indicating 17,800 levels to act as a strong support going forward.
Therefore, we believe that though Nifty has witnessed some correction from the all-time high seen in mid-October, Nifty remains in an intermediate uptrend till it is trading above an important support level of 17,780 levels.
While we remain open to further upsides, a short-term trend reversal would be confirmed only If the Nifty closes below the 17,780. Therefore, for traders our advice is to remain bullish and accumulate longs on declines with the stop loss of 17,780 levels.
On the higher side, Nifty is likely to find Immediate resistance at 18,342 and 18,600 levels.
After sharp corrections during the second half of October month, Nifty Small cap and Midcap Indices are consolidating in the narrow range during the last few days. Declines outnumbered the advances on November 15 while the number of stocks making new 52-week highs are falling during the last few days, indicating only selective stocks are doing well from the Midcap/Small caps space. Therefore, for traders our advice is to be very selective in buying Midcap/Small cap stocks for the short term. Focus of the traders should be on Pharma, FMCG, Auto and Hotels stocks for generating higher returns from hereon.
To conclude, the short-term trend remains positive for the Nifty. Next upside target for the Nifty is seen around 18,350 levels, followed by 18,600. Longs should be protected with a stop loss of 17,780.
Here are three buy calls for the next 2-3 weeks:
Lemon Tree Hotels: Buy | LTP: Rs 56.9 | Stop Loss: Rs 54 | Target: Rs 63 | Return: 11 percent
After taking support at 20-day EMA, stock price reversed northwards to close above its 5 and 10 day EMA with higher volumes. Primary trend of the stock is positive as it is trading above its 50, 100 and 200 day EMA.
Stock price is forming bullish higher top higher bottom formation on the daily chart. Daily RSI (relative strength index) and MFI (Money Flow Index) lines are placed above 60 and sloping upwards, indicating strength in the current uptrend.
Minda Corporation: Buy | LTP: Rs 176.85 | Stop Loss: Rs 165 | Target: Rs 200 | Return: 13 percent
In the month of September, the stock price has broken out from the downward sloping trendline on the monthly chart, adjoining the highs of December 29, 2017 and July 30, 2021.
After running corrections for the last few days, stock price resumed its uptrend where it closed at 5-day high with a surge in volumes. Plus, DI (Directional Indicator) is placed above the Minus DI while ADX (Average Directional Index) line is placed above 25, Indicating momentum in the current uptrend.
Tata Consumer Products: Buy | LTP: Rs 852.55 | Stop Loss: Rs 815 | Target: Rs 920 | Return: 8 percent
Stock price has broken out from the downward sloping trendline, adjoining the highs of September 7 and October 18, 2021. Primary trend of the stock is positive where it is trading above its all-important short-term and long-term moving averages.
Stock price has been forming a bullish higher top higher bottom candlestick pattern on the weekly chart. Daily RSI and MFI line has witnessed trend line breakout, which is bullish development for the short term.
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