Hindustan Construction Company has been forming higher tops and higher bottoms on the daily charts. The stock price is placed above all important moving averages. Indicators and oscillators have tuned bullish on daily and weekly charts.
Vinay Rajani
January 03, 2023 / 06:21 AM IST
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January is a month muted trade, if we were to go by the historical seasonality charts of the last 22 years. Average returns for January stands at minus-0.17 percent for the Nifty with more than 50 percent times the month ending in the red. December has been the best performing month for the Nifty, as per the historical data.
Derivatives data looks neutral for the Nifty now and does not give any convincing indication for a directional up-move. Technically, the Nifty has ended December 2022 with a bearish engulfing candlestick pattern on the monthly chart, which indicates the probable bearish trend reversal for the short to medium term.
The Nifty has been forming lower tops and lower bottoms on the daily chart and still placed below 20 and 50-day SMA (simple moving average). Therefore, we believe that it could find some selling pressure at higher levels. It has got strong resistance at 18,500 and strong support at 17,800. We expect Nifty to remain in the range of 17,800-18,500 for the short term.
However, good thing is that the breadth of the market has been going strong, as the small-cap and mid-cap segments have been outperforming. There are many stocks from the mid-cap segment giving fresh breakouts on the medium-term charts. So, though the Nifty is not showing any strong technical setup as of now, select mid-cap and small-cap stocks could continue to perform well.
Sector rotation is also going on nicely. PSU bank, construction and infra and metal are sectors that look most bullish on the medium-term charts and are likely to outperform the benchmark indices. However, the FMCG index seems to have lost the strength on the short-term charts and could underperform the Nifty.
Here are three ‘buy’ calls for next 2-3 weeks:
Hindustan Construction Company: Buy | LTP: Rs 21.05 | Stop-Loss: Rs 18.90 | Targets: Rs 23.5-27 | Return: 28 percent
The stock price has surpassed crucial resistance of multiple top placed at Rs 20. It has resumed its primary uptrend after running correction. Price breakout is accompanied with rising volumes.
It has been forming higher tops and higher bottoms on the daily charts. The stock price is placed above all important moving averages. Indicators and oscillators have tuned bullish on daily and weekly charts.
Infrastructure and construction stocks have started outperforming and are expected to outperform in the short to medium term time frame.
Bank Of India: Buy | LTP: Rs 91.50 | Stop-Loss: Rs 85 | Targets: Rs 97-105 | Return: 15 percent
The stock price has found support on its 50-day EMA (exponential moving average) and bounced back with rising volumes. Primary trend of the stock has been bullish as it has been forming higher tops and higher bottoms on the daily and weekly charts.
PSU banking sector has been outperforming and the same is expected to continue, as Ratio chart of Nifty PSU Bank versus Nifty has given bullish breakout on the monthly chart. Indicators and oscillators have been showing strength in the current uptrend.
Nava: Buy | LTP: Rs 258.65 | Stop-Loss: Rs 240 | Targets: Rs 280-305 | Return: 18 percent
The stock found strength on chart on December 15, 2022, when it surpassed the resistance of 50-day EMA (exponential moving average) with significant jump in price and volumes. Post breakout, the stock started forming higher tops and higher bottom formation on the daily chart turned bullish on medium term charts as well.
The stock is on the verge of surpassing the all-time high level of Rs 279, registered on August 18, 2022. Metal sector has recently picked up the momentum and Nifty Metal Index has registered new all time high. Indicators and oscillators have turned bullish on daily and weekly charts.
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