Technical Call: Useful under 20-DMA; SH Kelkar, Vidhi Specialty could rise 13-15%

Nifty broke its three-day rally to end lower on March 26, led by losses in heavyweights, while broader indices ended higher.

At the close, Nifty was 0.42 percent or 92.1 points lower at 22,005. The Nifty Midcap 100 and Smallcap 100 index rose 1.05 percent and 0.41 percent respectively.

Nifty closed on a weak wicket as it closed below 5, 11 and 20 DMA. In derivatives, we have seen aggressive call writing at levels 22,200-22,300.

Moreover, during the recent pullback rally, Nifty failed to close above the gap resistance of 22,205-22,256 levels created on March 14, indicating that the upside level of 22,200-22,300 would act as a very strong resistance. Hence, traders are advised to remain cautious until Nifty closes above 22,300 levels.

On the other side: the recent swing low of 21,710, which acts as immediate support. Any close below 21,710 would result in a bearish trend reversal, which could drag Nifty towards the next support of 21,500-21,550 levels. We expect the Midcap/Smallcap space to outperform in the coming days.

Here are two recommendations for the next 3-4 weeks:

BUY SH Kelkar and Company (SHK) | Last cutoff: Rs 207 | Target: Rs 225, 234 | Stop loss: Rs 192 | Return potential: 13 percent

The stock price has broken out from the downward trend line on the monthly chart with an increase in volumes. Momentum indicators and oscillators such as RSI and MFI are in rising mode and are above 60 on the daily chart, indicating the strength of the stock.

BUY Vidhi Special Food | Last cutoff: Rs 467 | Target: Rs 510, 535 | Stop loss: Rs 430 | Return potential: 15 percent

The stock price has broken through on the monthly chart by surpassing the multiple top resistance of 450 odd levels. The stock’s primary trend is positive as it trades above key short- and long-term moving averages. Momentum indicators and oscillators show strength in the monthly chart.

Disclaimer: Nandish Shah is a Senior Technical and Derivatives Analyst at HDFC Securities. Opinions are his own.

First print: March 27, 2024 | 6:35 am IST