Buy Reliance Industries and Asian Paints stocks for near-term gains as Nifty daily chart shows strength

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An upward acceleration towards 17800 levels is likely once the Nifty clears the descending sloping trendline

By Subash Gangadharan

The daily chart indicates that the Nifty 50 index has reversed its recent downtrend as it cleared the previous high of 17050 and closed the gap to the downside on February 14, 2022. An upward acceleration towards the levels of 17800 is likely once the Nifty clears the downward sloping trend line. which held the highs from February 02 and 10, 2022. It is important that in case of a correction, Nifty must hold the support of 17224; if not, the bears could regain the upper hand.

The choices below are for the next 15 to 26 trading sessions

Buy Reliance Industries Ltd (RIL)

Reliance Industries is in an intermediate uptrend as it continues to make higher highs and lower lows over the past few months. After correcting recently and finding support at the 2305 levels, the stock rebounded on Tuesday thanks to healthy volumes. In the process, it broke out of the 2305-2421 trading range.

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 have rebounded and are now in bullish mode. The comparative relative strength indicator is also starting to rise, indicating that the stock is likely to outperform the Nifty in the coming sessions.

With the intermediate technical setup looking positive, we believe the stock has the potential to rise in the coming weeks and therefore recommend a buy between the 2400-2420 levels. CMP is 2407.65. The stop loss is at 2325 while the targets are at 2625.

Buy Asian Paintings

Asian Paints showed relative strength this week. While the Nifty index lost 0.47% this week, Asian Paints gained 0.81% over the same period. In the process, the stock also broke out of its recent trading range thanks to above-average volumes.

Technical indicators are giving positive signals as stocks trade above the 20-day SMA and the 200-day EMA. Daily momentum indicators like the 14-day RSI have also rebounded and are now in bullish mode, which bodes well for the continuation of the uptrend.

With the intermediate technical setup looking positive, we believe the stock has the potential to move higher and reach its previous intermediate highs in the coming weeks. We therefore recommend a purchase between the 3220-3260 levels. CMP is 3242.2. The stop loss is at 3100 while the targets are at 3550.

(Subash Gangadharan is Senior Technical and Derivatives Analyst at HDFC Securities. Opinions expressed are those of the author. Please consult your financial advisor before investing.)

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