Charts show support for these two stocks as Nifty looks to be headed towards new highs

September 17, 2020 10:49 AM

After touching a low of 11185 and finding support close to the 50-day SMA, the Nifty has rallied smartly in the last few sessions.

After the sharp upmove of 25th and 28th Sept, Nifty shifting into a sideways range movement could apparently be seen as a breather action before further upside.

By Subash Gangadharan

After touching a low of 11185 and finding support close to the 50-day SMA, the Nifty has rallied smartly in the last few sessions and crossed the previous swing highs of 11585. It has therefore reversed the recent downtrend and entered into a new uptrend. Technical indicators too are giving positive signals for the short term as the Nifty has moved above the 20-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 in the near term. Any corrections are likely to find support around the 11400 levels.

Buy Mahindra & Mahindra

After consolidating for several sessions between the 610-630 levels, M&M broke out of this range on Wednesday on the back of huge volumes. 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 M&M between 630 and 640. CMP is 638.35. Targets are at 700, while stop loss is at 610.

Buy Dr Reddy

Dr Reddy has broken out of the 4320-4482 trading range on Tuesday on the back of huge volumes. With the 50-day SMA providing support to the stock and the daily and weekly technical set ups looking positive, we expect more upsides for the stock in the coming sessions.

Momentum readings like the 14-day RSI too is in rising mode and not overbought. We therefore recommend buying Dr Reddy between 4550 and 4650. Targets are at 5010, while stop loss is at 4470. CMP is 4640.

(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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