A somewhat disappointing outcome for the BJP led to a staggering drop of over 2,000 points in a single session on the Nifty 50.
After hitting an all-time high above the 23,300 mark, the Nifty 50 plunged to 21,281 on the day the results were announced.
Consequently, the bulls took charge, driving the Nifty 50 to a new milestone of 24,000.
This indicates extremely heavy bullish positions, suggesting a possibility of substantial profit booking in the coming weeks.
Strategy: BuyTarget: Rs 2,650Stop-Loss: Rs 2,480SBI Life Insurance Company | CMP: Rs 1,491.95In recent days, SBI Life has been consolidating within Rs 1,440-1,480 range.
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By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
Who would have predicted the dramatic events of June 2024 just a month ago? The month felt like a wild roller coaster for both bulls and bears on D-Street. A somewhat disappointing outcome for the BJP led to a staggering drop of over 2,000 points in a single session on the Nifty 50. After hitting an all-time high above the 23,300 mark, the Nifty 50 plunged to 21,281 on the day the results were announced. However, under the leadership of Prime Minister Modi, the BJP managed to form a government, which bolstered market sentiment. Consequently, the bulls took charge, driving the Nifty 50 to a new milestone of 24,000. Overall, the index gained over 6 percent during the month.
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From a technical perspective, the Nifty confirmed a breakout from the rising channel that had been respected for many months. The theoretical target of this breakout was between 24,200 and 24,400, and the index peaked close to the 24,200 mark. In recent weeks, we observed significant index management in the domestic markets, with a few stocks driving the benchmarks while the broader markets consolidated. Even on Friday, the index surrendered all its gains and closed flat near the 24,000 mark, forming a reversal candlestick pattern. The FIIs long-short ratio in index futures reached over 80 percent, the highest in months. This indicates extremely heavy bullish positions, suggesting a possibility of substantial profit booking in the coming weeks.
We advise traders to book their short-term long positions. On the downside, the 23,900 – 23,600 zone might provide immediate support in the coming sessions, but even a dip of a few hundred points in the Nifty could be damaging for individual stocks. A move above 24,400 might extend the rally to much higher levels, but even in that scenario, it is advisable to book full profits.
The Nifty Bank index was also not spared on election results day. The index nearly hit a lower circuit during the session but managed to recover somewhat afterward. Following the Nifty, the banking index began its upward journey and cleared the much-anticipated hurdle of 50,000. Recently, the index hit a high above 53,000 before correcting in the previous session, forming a reversal candlestick pattern. Moving forward, only a move above 53,200 might extend the rally to the 54,000 mark, while a daily close below 52,000 could confirm a temporary top for the index.
Here are three buy calls for short term:
Nestle India | CMP: Rs 2,551.65
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Recently, Nestle India has shown significant technical resilience by finding support around the Rs 2,500 mark, a critical support zone for the stock. This level has historically acted as a strong floor, preventing the stock from declining further. Moreover, the stock has formed a Rounding Bottom pattern near this zone, which is typically a bullish signal indicating a potential reversal of a downtrend.
Adding to the bullish outlook, the Relative Strength Index (RSI) on the daily chart has bounced back from the 50 level. The RSI is a momentum indicator, and a reversal from the 50 level suggests renewed buying interest and potential upward momentum. Given these technical signals, we recommend investors and traders to consider going long on Nestle India within the price range of Rs 2,530-2,555. The suggested upside target for this trade is Rs 2,650, while a stop-loss should be set at Rs 2,480 on a daily closing basis to manage potential downside risks.
Strategy: Buy
Target: Rs 2,650
Stop-Loss: Rs 2,480
SBI Life Insurance Company | CMP: Rs 1,491.95
In recent days, SBI Life has been consolidating within Rs 1,440-1,480 range. This consolidation phase suggests that the stock was undergoing a period of accumulation or stabilization after prior movements. Notably, SBI Life has recently broken out of this consolidation range and is now sustaining levels above it, indicating a potential upward trend. The consolidation occurred around the 21-day, 50-day, and 100-day Exponential Moving Averages (DEMA), which is a positive technical sign. These moving averages are significant because they represent different periods of price action, and consolidation around these levels suggests strong support and stability.
From an indicator perspective, the RSI on the daily chart has rebounded from the 50 level. Hence, we recommend going long on SBI Life within the Rs 1,475-1,495 price range. The suggested upside target is Rs 1,565, while a stop-loss should be set at Rs 1,445 on a daily closing basis to manage risk.
Strategy: Buy
Target: Rs 1,565
Stop-Loss: Rs 1,445
Oil and Natural Gas Corporation | CMP: Rs 274.2
Recently, ONGC has experienced a reversal from its support level at Rs 265, which coincides approximately with its 100-day Exponential Moving Average (DEMA). This alignment enhances the attractiveness of ONGC at its current levels, as the 100 DEMA is a significant technical indicator used to assess the stock's medium-term trend.
Additionally, the Moving Average Convergence Divergence (MACD) indicator on the daily chart has shown bullish divergence during the previous correction phase, indicating that the stock's downward momentum was weakening. Furthermore, the MACD has formed a bullish cross near the zero line, which typically signals the start of a new upward trend. These technical indicators support a bullish outlook for ONGC. Based on this analysis, we recommend buying ONGC within the Rs 272-276 price range, targeting an upside of Rs 300. To manage risk, a stop-loss should be placed at Rs 260 on a daily closing basis.
Strategy: Buy
Target: Rs 300
Stop-Loss: Rs 260
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.
