Nifty likely to remain choppy, these are the key levels as per Vinay Rajani

The technical analyst from HDFC Securities recommends buying Action Construction Equipment and Bandhan Bank.

Nifty: Choppy trend Continues

The NSE Nifty has been consolidating in the narrow range for the last six trading sessions. The Nifty has formed double bottom pattern at 16,950-odd levels on the daily chart.  However, bullish reversal would only be confirmed if Nifty surpasses 17,393 on a closing basis. Any close below 16,950 would be considered fresh break down on the charts, which could drag Nifty towards next support of 16,604.

Buy

Action Construction (ACE)

Last close: Rs 244

Target: Rs 265

Stop Loss: Rs 230

The stock has been finding support on its 200-day EMA for the last 6 months. Last week, the stock broke out from the narrow range with jump in volume. The stock has surpassed the crucial resistance of previous swing high at Rs 244. The weekly RSI has reached above benchmark level of 50, indicating rising momentum. The Weekly MACD indicator has crossed signal line on the upside and has reached above the equilibrium line. The stock is placed above all important moving averages, indicating bullish trend on all time frames.

Buy

Bandhan Bank

Last close: Rs 340

Target: Rs 365

Stop Loss: Rs 320

The downward sloping trend line breakout is seen on the weekly charts. The price breakout is accompanied by jump in volume. The stock has also surpassed its previous top resistance of Rs 331 on the weekly chart. The stock is now placed above all important moving average parameters. Indicators and oscillators like RSI, DMI and MACD have been showing strength in the current up move. The relative strength of the stock is high as compared to other banking stocks.

(Vinay Rajani, Senior Technical and Derivative Research Analyst at HDFC securities. Views expressed are personal).