Vinay Rajani, an analyst at HDFC Securities, anticipates ongoing choppiness in the market’s benchmark indices, while emphasizing the potential for Bullish actions in specific stocks.
On October 16, the Nifty50 experienced its third consecutive session of decline, closing at 19,731, down 19 points. Nevertheless, these three sessions saw muted momentum and volatility, with the index trading within a narrow range of around 200 points.
During the same period, the Nifty Midcap and Smallcap indices also maintained a tight trading range. A potential rally could be reignited if the Nifty climbs above 19,845, while support may be found at 19,480.
Both the Nifty and NSE500 have shown follow-up gains after forming bullish reversal candlestick patterns in the previous week, keeping short-term bullish prospects alive. The Nifty has been consolidating around its 50-day EMA (exponential moving average) at 19,587 for the past 15 days. Conversely, the Bank Nifty has struggled to stay above its 50-day EMA at 44,624.
In the short term, resistance for the Nifty is expected around 19,840, which, if breached, could extend the uptrend towards 20,000. On the downside, support at 19,480 corresponds to the previous daily chart’s swing low.
Notably, approximately 90 percent of NSE500 stocks are currently trading above their 200 DMA, indicating a robust market breadth.
While benchmark indices are likely to remain volatile, stock-specific bullish opportunities persist. Traders should exercise caution when selecting mid and small-cap stocks in light of the market’s ongoing consolidation phase. Holding Nifty long positions with a stop-loss at 19,480 is advised.
Here are three recommended buy calls for the next 2-3 weeks:
RITES:
- Buy at the Last Traded Price (LTP) of Rs 502.2
- Stop-Loss: Rs 457
- Target: Rs 585
- Potential Return: 16 percent
RITES has consistently found support near its 20-day EMA and broken out of a downward sloping trend line on the daily chart. This breakout was accompanied by a surge in trading volumes. Additionally, the stock is trading above its 20, 50, and 200 DMAs, indicating a bullish trend on all timeframes. Key indicators like MACD and RSI have turned bullish on the daily charts.
Gujarat Alkalies & Chemicals:
- Buy at the Last Traded Price (LTP) of Rs 778.90
- Stop-Loss: Rs 720
- Target: Rs 850
- Potential Return: 9 percent
Stove Kraft:
- Buy at the Last Traded Price (LTP) of Rs 563.85
- Stop-Loss: Rs 534
- Target: Rs 602
- Potential Return: 7 percent
Stove Kraft has been forming higher highs and higher lows on the daily charts and is trading above its 20, 50, 100, and 200 DMAs, indicating a bullish trend on all timeframes. Both daily and weekly charts show bullish signals from key indicators and oscillators.
These buy calls offer potential opportunities for short-term gains, keeping in mind the ongoing market conditions.
