By Shrikant Chouhan
A stellar rally was witnessed in benchmark indices on Tuesday, with the NSE Nifty 50 ending 446 points up, while BSE Sensex saw a rise of 1,564 points. Technically, after opening the gap, the index successfully cleared the 17525 resistance level and after a breakout, it accelerated the positive momentum. On the daily chart, it has formed a long bullish candlestick structure, which is largely positive. Moreover, the index again successfully crossed the barrier of the 20-day SMA (Simple Moving Average) level and managed to close above the same. The indices rose over 600/2200 points in the last two days. We are of the view that the short-term market structure has changed from negative to positive due to a strong pullback from lower levels which happens generally on the last day of the monthly close, but due to temporarily overbought conditions, we may see range-bound activity in the near future.
For traders, now the 17550/59000 or the 20-day SMA could be an important level to notice. Above 17550, the index can accelerate to the level of 17800-17850/59750-59900. On the other hand, an uptrend below 17500/58850 would be weak. If the Nifty crosses the 18000/60050 level then it will take the indices to the 18300-18350/60900-61000 level without any major effort.
Stocks to buy
BUY, CMP: Rs 1076.1, TARGET: Rs 1,130, SL: Rs 1,055
Post correction from the higher levels the counter has formed a Hammer candlestick pattern near its demand zone. The structure suggests that the stock is getting bullish interest at the lower levels. Hence, the formation hints at a fresh uptrend in the coming horizon.
State Bank of India (SBI)
BUY, CMP: Rs 531.25, TARGET: Rs 560, SL: Rs 520
The stock has given a breakout of the sloping channel pattern on the daily chart. Hence, the bullish activity with rising volume post breakout hints at an up move to continue in the near term.
BUY, CMP: Rs 591.9, TARGET: Rs 620, SL: Rs 580
After a medium term correction, eventually the stock took the support and reversed its trend. Post reversal, it has formed double bottom chart formation. The overall pattern offers buying opportunities for the positional traders with a decent risk-reward ratio.
BUY, CMP 390, TARGET 410, SL 380
On the daily scale, it has formed an ascending triangle chart pattern. The structure indicates breakout from the current levels and the beginning of a new up move in the counter.
(Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities. Views expressed are the author’s own.)