After rallying for five consecutive sessions, the Nifty corrected on Wednesday from a high of 10848. The Nifty failed to test the 200-day SMA, which is currently at 10885.
By Subash Gangadharan
After rallying for five consecutive sessions, the Nifty corrected on Wednesday from a high of 10848. The Nifty failed to test the 200-day SMA, which is currently at 10885. Zooming into the 15 minute intra charts, we can see that the Nifty has closed just above the intraday support of 10689. A close below this level could trigger a bigger correction that could see the Nifty moving down towards the next major support at 10560-10520 where we have the 200-day EMA.
On the other hand, if the Nifty does find support at the 10689 levels, then a bounce back is possible that could take the Nifty once again towards the 200-day SMA. The below picks are for the next 15-26 trading sessions.
Buy Shriram Transport Finance
- Nifty to consolidate in 15,900-15,400 range in F&O expiry week, Bank Nifty positive; RIL, Infosys top bets
- Nifty may hit 16,100, if it crosses 15,750; Bank Nifty remains in uptrend; Infosys, Asian Paints in focus
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After correcting sharply from a high of 1367 touched in February 2020, Shriram Transport Finance found support around the 440 levels a few months back. The stock had also previously found support around these levels many years back, thereby making it a strong support on the long term charts. The stock has since then rebounded and gradually moved higher, making higher tops and higher bottoms in the process.
This week, the stock has broken out of the 690-714 narrow trading range on the back of healthy volumes. This augurs well for the current uptrend to continue.
Technical indicators are giving positive signals as the stock trades above the 13-day and 50-day SMA. Daily and weekly momentum readings are in rising mode and not overbought.
We recommend a Buy between 740 and 760 with a SL at 700 and Target of 880 for 2-5 weeks. CMP is Rs. 757.
Buy United Spirits
United Spirits has formed a double bottom pattern on the daily charts around the 585 levels. The stock has since then been gradually moving higher in the last few sessions, which is encouraging.
Today, the stock broke out of the 590-605 range on the back of huge volumes, which augurs well for the uptrend to continue.
Technical indicators are giving positive signals as the stock trades above the 13-day SMA and the 14-day RSI is in rising mode and not overbought. The Relative Strength Comparative indicator too has started turning up, indicating that the stock is outperforming the Nifty.
We recommend a Buy between 605 and 621 with a SL at 590 and Target of 670 for 2-5 weeks. CMP is Rs 620.5.
(Subash Gangadharan is a technical research analyst at HDFC Securities. Views expressed are the author’s own.)