By Rajesh Bhosale, technical analyst at Angel One
The market rallied significantly on March 1, with the Nifty surging more than 1.60 percent to break out of the recent consolidation range and closing at a fresh new high above 22,300.
Throughout the latter half of February, prices fluctuated within a range of 21,850 to 22,250. However, March began with a strong momentum, breaking out of this consolidation phase and signaling a continuation of the primary uptrend.
Friday saw widespread buying, particularly among heavyweight stocks, with the banking sector finally joining the bulls party. With this, bears find themselves lacking substantial evidence to support their case, and in the near term, we'll probably witness a continuation of this upward momentum.
However, on the indicators front, there's a noteworthy observation; while prices are reaching new highs, the momentum indicator RSI smoothed isn't following suit, indicating a 'negative divergence.' This serves as a warning to traders, suggesting caution and advising against aggressive bets.
Recent market events have demonstrated that such complacency can lead to severe punishment, often with significant price corrections occurring unexpectedly. Traders are therefore encouraged to adopt a "buy on dip" strategy and focus on individual stocks that will yield better returns.
In this scenario, key levels to monitor would be 22,250 and 22,150 as immediate support levels. Additionally, the level of 21,850 has gained significant respect after being defended for two consecutive Thursdays, suggesting that any major weakness would likely only occur if this level is breached.
On the other hand, with the markets trading in uncharted territory, identifying key resistance levels becomes challenging. However, considering reciprocal retracements, levels around 22,500 and 22,630 are viewed as immediate resistance.
Here are two buy calls for short term:
V-Guard Industries: Buy | LTP: Rs 338 | Stop-Loss: Rs 324 | Target: Rs 366 | Return: 8 percent
The stock prices of V-Guard surged impressively during February, surpassing its previous weekly swing high of around Rs 330 levels. This breakout resembles a 'Saucer' formation and is supported by robust trading volumes.
With the stock entering uncharted territory, it suggests a dominant presence of bulls camp, seemingly cruising ahead with confidence. Notably, price corrections have been met with rebounds, finding support around the 20EMA (exponential moving average). Looking forward, there's anticipation for continued strong performance from this stock.
Hence, we recommend buying V-Guard around Rs 338 - 335, with a stop-loss of Rs 324 and target of Rs 366.
Triveni Turbine: Buy | LTP: Rs 491.5 | Stop-Loss: Rs 468 | Target: Rs 550 | Return: 12 percent
The stock prices encountered significant resistance around Rs 470 levels, persisting for over five months. Finally, we're witnessing a breakout from this prolonged consolidation phase, resembling a 'Channel' pattern.
Volume analysis reveals higher trading volumes during uptrends compared to downtrends. Additionally, prices are consistently forming 'higher top higher bottom' patterns, entering new territory. Moreover, they are comfortably above key moving averages, while oscillators indicate a positive stance, reinforcing the bullish outlook.
Hence, we recommend buying the stock around Rs 492 - 488, with a stop-loss of Rs 468 and target of Rs 550.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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