Vinay Rajani recommends buying these stocks; hold Nifty with stop at 18,000

The technical analyst from HDFC Securities suggests that Ashok Leyland has one of the strongest set-up on the charts in the auto space

The NSE Nifty recently found support at its 20-day EMA and reversed northward. In the process, the Nifty also managed to hold above the previous top level of 17,947. The 20-day EMA has now shifted up to 18,015 level, which can act as support going forward.

The BankNifty has closed at an all-time high level and we can expect it to continue with its outperformance. Traders are advised to hold longs in Nifty with 18,000 stop loss. On the higher side 18,600 could act as a short term resistance.

Stock recommendations:

Buy Ashok Leyland (Rs 143)

Target Rs 138

Stop-loss Rs 152

The stock has broken out from the “Flag” pattern on the daily chart with higher volumes. The Nifty Auto Index has also resumed its primary uptrend. The primary trend of the stock has been bullish with higher tops and higher bottoms. The stock has been holding levels above its medium to long term moving averages. Technical Setup of Ashok Leyland is one of the strongest amongst all other auto stocks

Buy Avenue Supermart (Rs 4580)

Target Rs 4,400

Stop-loss Rs 4,880

On 26 October 2021, the stock rose 4 per cent with rising volumes. Earlier on 18 October 2021, the stock had hit an all-time high of Rs 5,900 and started correcting after that. The stock witnessed a healthy correction of more than 26 per cent in the span of just 6 trading sessions in the period from 18 October to 25 October 2021. Post correction, the stock reached an extremely oversold zone on the short term charts. The stock is expected to recoup the losses seen in the recent past. Primary trend of the stock has been bullish with higher tops and higher bottoms on the weekly and monthly charts.

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Disclaimer: Vinay Rajani, Technical Research Analyst, HDFC securities. Views expressed are personal.