Nifty halted its minor profit-booking near 23.60 percent Fibonacci retracement from its previous intermediate low and closed above 14,600 with a gain of nearly a percent on January 20.
The benchmark index is trading within a rising channel formation on the daily chart which confirms the higher high higher low formation.
India VIX, after facing a stiff resistance near 25.50 levels, has closed below 22 levels, drifting six percent lower for almost two consecutive days.
Momentum oscillator RSI (14) seems to have completed its double-bottom formation near 60 levels, which indicates RSI has formed base support near 60 levels and the initial trend for the index would likely be on the higher side.
We assume that the short-lived correction is probably over and the benchmark index is ready for its next leg of impulse wave which will stretch Nifty to trade in unchartered territory.
As the market is inching higher, there is an upshift in support level which is placed at 14,300 levels. A breach of 14,300 mark will test a lower band of a rising channel pattern near 14,150 levels. While Fibonacci projection suggests 14,830 will be the next resistance to watch out for.
Here are three buy calls for the next 2-3 weeks:
[Divi’s Laboratories | LTP: Rs 3,605.70 | Target price: Rs 3,800 | Stop loss: Rs 3,495 | Upside: 5%]
This stock is trading within a rising channel pattern on the daily time frame, which confirms the higher high higher low formation.
Prices are near the support of the lower band of a rising channel which is clubbed with 38.20 percent Fibonacci retracement on a daily scale.
The stock is trading above its 100 and 200–day exponential moving averages and momentum oscillator RSI (14) has witnessed a sharp reversal from the oversold zone and is currently reading above 40 levels on a daily interval.
[Reliance Industries | LTP: Rs 2,054.70 | Target price: Rs 2,175 | Stop loss: Rs 1,990 | Upside: 6%]
For the last couple of months, this stock had been trading within a narrow consolidation range on the daily timeframe.
On January 18, the stock finally witnessed a consolidation breakout, trading above its trendline support.
In this recent price spurt, the stock has given a breakout about its 21 and 50-day moving averages on a daily timeframe, which is extremely positive for the counter.
Momentum oscillator RSI (14) has given a horizontal trendline breakout which was placed near 50 levels and is currently reading above 55 levels with bullish crossover on the daily scale.
[India Cements | LTP: Rs 172.25 | Target price: Rs 184.50 | Stop loss: Rs 165 | Upside: 7%]
On the daily chart, this stock has witnessed a pole flag pattern breakout above Rs 168 level.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong consolidation breakout.
After a minor price correction in the previous week, the stock has been able to close above its 50 and 100-day exponential moving averages on the daily chart.
Positive divergences on secondary oscillators with rising volumes also suggest that the up-move could continue in the upcoming sessions as well.
The stock is trading in a higher high higher bottom formation on the broader timeframe and the cement sector has started showing strength in a higher timeframe.
(The author is a technical analyst at Bonanza Portfolio)
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.