By Subash Gangadharan
Over the last few weeks, the Nifty has been in correction mode. The downtrend was confirmed when the support of 17613 was broken. On the daily chart, we see that the Nifty remains in a downtrend despite the bounces seen recently. The index continues to make lower tops and lower bottoms for the last few weeks, barring the recent brief move above the swing high of 17490. The 20 day SMA also continues to trade below 50-day SMA, indicating a negative moving average crossover. Weekly momentum readings like the 14-week RSI are in decline mode.
The below picks are for the next 15-26 trading sessions
Buy KNR Constructions
KNR Constructions has shown relative strength this week. While the Nifty index has gained 1.1% this week, KNR Constructions has gained a healthy 5.2% over the same time period. In the process, the stock has also broken out of its recent trading range on the back of above average volumes.
Technical indicators are giving positive signals as the stock trades above the 20 day and 50 day SMA. Daily momentum indicators like the 14-day RSI too have bounced back and are in rising mode now, which augurs well for the uptrend to continue.
With the intermediate technical setup looking positive, we believe the stock has the potential to move higher and take out its previous intermediate highs in the coming weeks. We therefore recommend a buy between the 297-303 levels. CMP is 300.8. Stop loss is at 282 while targets are at 340.
Buy Gujarat Narmada Valley Fertilizers & Chemicals
GNFC is in an intermediate uptrend as it continues to make higher tops and higher bottoms over the last several months. After correcting recently and finding support at the 390 levels, the stock bounced back this week on the back of decent volumes.
Technical indicators are giving positive signals as the stock trades above the 20 day and 50 day SMA. Daily momentum indicators like the 14-day RSI too have bounced back and are in rising mode now, which augurs well for the uptrend to continue.
With the intermediate technical setup looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the 445-455 levels. CMP is 450.6. Stop loss is at 415 while targets are at 525.
(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)