On February 1, Nifty and Sensex jumped 5 percent which happens to be the highest Budget day gain in percentage terms in the last 20 years.
Nifty Bank and Financial Services indices outperformed Nifty by a huge margin, posting a single-day gain of 8 percent.
Nifty managed to retrace more than 62 percent of the entire fall which we saw from 14,753 (January 21, 2021 top) to 13,596 (January 29, 2021 bottom).
The retracement of more than 62 percent of the primary down-move, which negates the chances of the resumption of a downtrend and therefore there are good chances that Nifty might surpass the all-time high of 14,753 soon.
On January 29, Nifty took support at the upward sloping trendline, adjoining the previous major bottoms of September 24 and October 30, 2020, on the daily chart.
Nifty and Bank Nifty have registered provisional long build-up of 18 percent and 23 percent, respectively.
Nifty has also reclaimed the level above its 20-day EMA, currently placed at 14,156. The volume-weighted average traded price of Nifty February future on February 1 is 14,033 which could act as strong support going forward.
Mid and small-cap indices underperformed on the Budget day as most of the rally was registered in derivative stocks due to sharp short-covering.
However, mid and small-caps can witness a catch-up rally in the days to come.
Considering the technical evidence discussed above, the market seems to have resumed its primary uptrend.
However, looking at the sharp up move on the Budget day, momentum could slow down a bit in the coming sessions of the week.
The range of 14,000-14,050 has become the floor for the Nifty and unless that is breached, traders should utilise dips to initiate longs.
Here are three buy calls for the short-term:
JBM Auto | LTP: Rs 382.15 | Target price: Rs 425 | Stop loss: Rs 338 | Upside: 11%
This stock remained resilient when the overall market was in a correction mode. The stock has been consolidating for the last eight sessions.
The primary trend of the stock has been bullish with higher tops and higher bottoms. It is trading above all important moving averages.
Moreover, the auto ancillary sector looks very strong on the medium to long-term charts.
AU Small Finance Bank | LTP: Rs 934 | Target price: Rs 1,050 | Stop loss: Rs 862 | Upside: 12%
The stock surged more than 7 percent with a significant jump in volumes on February 1.
The stock has broken out from the consolidation it held for the last 10 weeks. Indicators and oscillators like ADX, RSI and ACD have been showing strength on the daily and weekly charts.
Besides, the NBFC sector has resumed its primary uptrend after correction.
Dalmia Bharat | LTP: Rs 1,215 | Target price: Rs 1,350 | Stop loss: Rs 1,115 | Upside: 11%
The stock rose more than 5 percent with a jump in volume on the Budget day.
It formed a bullish cup and handle formation on the daily chart. It has closed at the all-time high levels.
This move has also taken out the crucial multiple top resistances placed at Rs 1,210 odd levels.
(The author is a technical research analyst at HDFC Securities)