Buy these two stocks with strong support on charts as Nifty continues to be ruled by bulls

Updated: October 08, 2020 8:44 AM

After touching a low of 10790 and finding support close to the 200-day SMA, the Nifty has rallied smartly in the last two weeks.

On the downside, supports are holding near 11650 levels, which shows that the bulls are inherently in control.

By Subash Gangadharan

After touching a low of 10790 and finding support close to the 200-day SMA, the Nifty has rallied smartly in the last two weeks. In the process, it has taken out a downward sloping trendline that has held down its recent highs. The Nifty index has also closed above the 20-day and 50 day SMA, which is a positive signal.

Technical indicators too are giving positive signals for the short term as the Nifty has moved above the 20-day and 50-day SMA. The 14-day RSI too is in rising mode, indicating that momentum is picking up.

Given the strength and support of the various sectors which have helped to push the Nifty index higher, there is a good possibility that the Nifty could now be headed towards the next major intermediate highs of 11794-12013 in the near term. Any corrections are likely to find support around the 11400 levels.

Buy Maruti

After falling sharply and finding support at the 6270 levels which coincide with the 200-day EMA, Maruti has surged higher and resumed its uptrend. With the intermediate and long term technical patterns looking positive on the charts, this augurs well for the uptrend to continue.

Technical indicators too are giving positive signals as the stock trades above the 20-day SMA and 50-day SMA. The 14-day RSI too is in rising mode.

We therefore recommend buying Maruti between 6900 and 7055. CMP is 7051.1. Targets are at 7570, while stop loss is at 6800.

Buy IDFC First Bank

IDFC First Bank has bounced back strongly from the support of 26.85 in late September 2020. These levels also provided support to the stock in August 2020, thereby making it a strong support.

 The stock is now consolidating above the 20-day and 50-day SMA. With momentum readings like the 14-day RSI in rising mode and not overbought, the stock looks set to move higher in the coming sessions.

We therefore recommend buying IDFC First Bank between 30.7-31.7. Targets are at 36.5, while stop loss is at 29.50. CMP is 31.55.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own. Please consult your investment advisor before investing.)

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