Buy these 2 shares for gains; Nifty in down-trend, may fall to 17613 if it breaks 17820-17798

November 18, 2021 8:15 AM

Nifty is now in a short-term downtrend as evidenced by lower tops and lower bottoms made over the last 3 sessions.

Nifty, Bank NiftyGlobal cues were negative as Wall Street indices closed with losses. (Image: REUTERS)

By Subash Gangadharan

Over the last few weeks, the Nifty has been stuck in a range between the 50 day SMA and 20 day SMA. On the 15 min chart, we observe that Nifty is now in a short term downtrend as evidenced by lower tops and lower bottoms made over the last 3 sessions. The 20 period MA also continues to trade below the 50 period MA, which is again a negative signal for very near term.

On the daily chart, we can see that the Nifty has corrected further and is just above the 50 day SMA. With large caps like Reliance and Tata Steel looking weak on the daily charts, there is a good chance that Nifty could move below the 50 day SMA at 17842 and test the next major supports of 17820-17798 in the very near term. Any pullback rallies could find resistance at 17976. A larger correction towards the 17613 levels is likely if the 17820-17798 supports are broken.

The below picks are for the next 15-26 trading sessions

Buy Aarti Industries

Aarti Industries has shown relative strength this week. While the Nifty index has lost 1.19%, Aarti has gained a healthy 4.1%. In the process, the stock has also broken out of its recent trading range on the back of healthy volumes.

Technical indicators are giving positive signals as the stock trades above the 20 and 50 day SMA. Daily momentum indicators like the 14-day RSI too have bounced back and are in rising mode now, which augurs well for the uptrend to continue.

With the intermediate technical setup looking positive, we believe the stock has the potential to move higher and take out its previous intermediate highs in the coming weeks. We therefore recommend a buy between the 970-1000 levels. CMP is 986.95. Stop loss is at 960 while targets are at 1050.

Buy Firstsource Solutions

After correcting from a high of 223 touched in October 2021, Firstsource Solutions found support at the 167 levels in mid November 2021. These are strong support levels as they are just above the 200 day EMA.

With the momentum readings like the 14-day RSI bouncing back from oversold levels and in rising mode now and the intermediate technical set up looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 176-180 levels. CMP is 178.15. Stop loss is at 167 while targets are at 206.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. Views expressed are the author’s own, please consult your financial advisor before investing.)

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