Despite being a truncated week, it was not at all short of action and the bulls got the better end of it as the benchmark index Nifty ended with strong gains of 2.48% against the previous week’s close. Nifty is back into uncharted territory and momentum is strongly gripped by the bulls. Psychological 18,500 can be taken as the next resistance and thereafter every 100 points (round figure) can be considered as resistance. On the flip side, we sense that 18,000 to now act as strong support and as long prices trades above the same the bulls have no need to worry.
One of the key highlights was the participation of the Bank Index that finally joined the bulls party by breaking above its recent congestion zone and outperforming when the IT space showed some tentativeness. Going ahead, Bank Nifty is likely to extend its move towards the milestone of 40,000 and previous resistance around 38,300 to now act as a strong support zone.
The key action has been seen in stock-specific trades and traders are advised to keep the focus on thematic approach however at such elevated levels one should avoid aggressive bets and keep booking timely profits.
Divi’s Labs is a known name in the pharma space. However, for the past few weeks, it has been struggling to surpass levels of 5,280. On the daily chart, prices have now finally closed above this stiff resistance that previous four times acted as resistance in the recent past. By breaking above this resistance, the prices have entered uncharted territory and have also confirmed a bullish continuation ‘Inverse Head N Shoulder’ pattern. If we do the multiple time frame analysis on the momentum indicator RSI, it can be seen that the monthly and weekly RSI is placed above the 70 indicating the higher time frame is strong positive and Daily RSI crossing above 60 indicating that short term after a breather is again picking momentum thus the overall bullishness in the counter. We recommend this counter at current levels for a near term target of Rs.5775. The stop loss can be placed below Rs 5190.
UltraTech Cement | Buy | Stop loss: Rs 7190 | Target price: Rs 7800
Post making a new high above the 8000 levels in the September month the stock prices have gradually declined in the last one month. This decline can be taken as a much-needed correction and healthy in nature after seeing the mammoth rally post the panic low created last year around the 2,885 levels. This correction however seems to be arrested around its key average of 89EMA and its August month swing low of 7,300. On the weekly charts, we are witnessing a bullish reversal ‘Dragon Fly Doji’ and a small trend line bullish breakout is also visible on the daily chart. In addition, the bounce from the support levels are backed with good increasing volumes supporting our bullish bias. Moreover, a fresh buy crossover can also be seen in RSI indicator with its smoothened moving average. On Friday, we saw many cement stocks picking up the positive momentum and with the favourable reward to risk ratio at current levels we recommend a buy for a target of Rs 7,800 in the near term. The stop loss can be placed at Rs. 7190.
(The writer is technical analyst at Angel One. Views expressed are personal)
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