By Subash Gangadharan
Nifty has been consolidating in a tight range for the last few sessions. The index nevertheless remains in an uptrend. On the daily time frame, Nifty has recently made higher bottoms at 16162, 16376 and 16565 and continues to trade above the 20 and 50 day SMA, which gives further evidence of an intermediate uptrend.
On the 60 minute chart, the Nifty has bounced back on Wednesday from close to its 50 period MA. This indicates that the uptrend looks set to continue. Immediate upside targets for the Nifty are at 17500. Crucial supports to watch for the emergence of weakness are at 17238.
The below picks are for the next 15-26 trading sessions
Buy KEI Industries
Kei Industries has shown relative strength this week. While the Nifty index has gained marginally, this stock has surged higher by 6.19%. In the process, the stock has also broken out of its recent trading range on the back of above-average volumes.
Technical indicators are giving positive signals as the stock trades above an upward sloping 20 week and 50 week 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 to new life highs in the coming weeks and therefore recommend a buy between the 820-832 levels. CMP is 827.9. Stop-loss is at 770 while targets are at 960.
Buy Federal Bank
After correcting from a high of 91 touched in mid-July 2021, Federal Bank found support at the 77 levels in late August 2021. These levels correspond to the previous intermediate lows of the stock tested in May 2021 and also the 200 day EMA, thereby making it a strong support.
The stock has bounced back well in the last few sessions from these supports and is now trading above the 20 day SMA. Momentum readings like the 14-day RSI too are in rising mode, which is encouraging.
With the intermediate and long term technical setup too looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 82-84 levels. CMP is 83.45. Stop loss is at 79 while targets are at 94.
(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.)