Karan Pai of GEPL Capital believes that Nifty50 might continue to hover around the 20-week SMA (17,344) and might remain rangebound between 17,200 (multiple touch point levels) and 17,800 (3-week high).
Karan Pai, CMT
December 10, 2021 / 07:56 AM IST
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Nifty seems to have halted its fall, at for now. It found support near the 16,891-mark on December 6, 2021, and since then it has been moving higher.
The price action on the shorter time frame suggests that currently the prices are moving out of a range (16,782-17,490) and attempting to move higher.
On the options open interest front, (December 16, 2021) highest open interest addition was seen in the 18,500 Call and 2nd highest open interest addition was seen in the 17,200 Put contracts, thus we can expect the broader range of the index to be 17,200-18,500.
We believe that in the sessions to come, the prices might continue to hover around the 20-week SMA (17,344) and might remain rangebound between 17,200 (multiple touch point levels) and 17,800 (3-week high). If the prices breach above the 17,800-mark, we might see a move towards the 18,500 (multiple touch point level) and 18,600 (previous swing high) level.
The key level to watch for on the downside will be the 17,200 level. If the prices breach below the 17,200 we might see a drop towards 17,000 (psychological support level) and 16,800 (recent swing low) mark.
Here are three buy calls for next 2-3 weeks:
Aditya Birla Capital: Buy | LTP: Rs 124.45 | Stop-Loss: Rs 115 | Target: Rs 161 | Return: about 29% from the current level.
Aditya Birla Capital for the past 9 months had been moving lower in well-channelized manner. In the week starting November 29, 2021, the prices not only broke but also closed above the upper trend line of the channel. In the current week, the prices managed to sustain above the previous week high and move higher.
On the indicator front, the RSI (relative strength index) plotted on the weekly chart can be seen moving higher towards the overbought level, indicating increasing bullish momentum in the prices.
Looking at the prices action and the technical parameters mentioned above we expect Aditya Birla Capital to move higher immediately towards Rs 149, post which we might see the prices test Rs 161.
Aditya Birla Capital seems to be a good buying candidate with upside targets of Rs 149 and Rs 161, we recommend a stop loss level of Rs 115 on daily closing basis for this setup.
ITC: Buy | CMP: Rs 235.40 | Stop-Loss: Rs 215 | Target: Rs 282 | Return: 20 percent
ITC on the short term time frame can be seen moving higher after finding support near the Rs 217 mark on December 6, 2021.
The stock gained momentum on December 9 and managed to capture the 20-week SMA (simple moving average).
On the indicator front, the RSI plotted on the weekly time frame witnessed a range shift and has been above the 50 mark since November 2020 with mild whipsaws. Currently it is placed above the 50 mark and is moving higher towards the overbought level, indicating increasing bullishness in the trend.
The prices action and the technical parameters mentioned above point towards the possibility of the prices moving higher towards the Rs 259 mark. If the prices sustain above Rs 259 mark we might see the prices move higher towards the Rs 282 and Rs 310 eventually.
ITC is currently bouncing off a support level and is moving higher. So the risk-reward level is very favourable for an investor. One can buy ITC at current levels and hold it with a target of Rs 259 and Rs 282 with a strict stop-loss of Rs 215 on daily closing basis.
Zee Entertainment Enterprises: Buy | LTP: Rs 367.95 | Stop-Loss: Rs 333 | Target: Rs 440 | Return: 20 percent
Zee Entertainment Enterprises for the past couple of months has been drifting higher after finding support near the Rs 285 mark. In the week started December 6, 2021 the prices gained momentum and managed to move and close above the previous swing high of Rs 362.
The RSI plotted on the weekly chart can be seen moving higher as the prices resume its uptrend after a correction, indicating increasing bullish momentum as the prices resume its up move after a correction.
The momentum indicators and the technical parameters all point towards the possibility of the prices moving higher towards the Rs 406 mark immediately. If this level is breached, we might see the prices move towards Rs 440-480 level eventually.
Our bullish view will be negated if the prices breach below Rs 333. We also recommend this level to be a strict stop loss on closing basis.
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