Nifty breaks winning streak, but remains in medium-term uptrend

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The Nifty broke its three-day winning streak on September 18, falling 59 points to close at 20,133. The decline was led by weak global cues, as investors remained cautious ahead of a week packed with central bank meetings in five countries.

Despite the recent pullback, the Nifty’s primary and intermediate trend remains positive, as it has been holding above its 50, 100, and 200-day exponential moving averages (EMAs). On the weekly chart, the 14-week relative strength index (RSI) is at 71.64, which suggests that the market is not extremely overbought and there is scope for more upsides in the medium term.

On the derivatives side, there has been aggressive Put writing at 19,800-20,000 levels, which coincides with the 11 and 20-day moving averages placed at 19,918 and 19,771. Therefore, on the downside, 19,770-20,000 could now be considered as an immediate support for the Nifty.

While the possibility of a running correction in the next few days cannot be ruled out, experts believe that the Nifty could move towards immediate upside targets of 20,600. This target is the 38.2 percent Fibonacci extension of the recent up-move from the lows of March 2023 to the highs of July 2023. Therefore, traders are advised to accumulate longs on decline with a stop-loss at 19,770 on the Nifty on a closing basis.

Broad market indices like Nifty Midcap and Smallcap indices have underperformed the Nifty during the last week. Experts believe that they may continue to underperform for the coming few weeks before they resume their uptrend. In terms of strategy, they recommend having a bias towards Largecaps.

Three buy calls for the next 3-4 weeks:

  • AMI Organics: Buy | LTP: Rs 1,302 | Stop-Loss: Rs 1,220 | Targets: Rs 1,393-1,460 | Return: 12 percent
  • GSFC: Buy | LTP: Rs 172 | Stop-Loss: Rs 160 | Targets: Rs 186-195 | Return: 13 percent
  • Axis Bank: Buy | LTP: Rs 1,025 | Stop-Loss: Rs 970 | Targets: Rs 1,085-1,130 | Return: 10 percent

Please note that these are just recommendations and investors should always do their own research before making any investment decisions.


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