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

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

By Subash Gangadharan

Daily chart indicates Nifty 50 index has reversed its recent downtrend as it has crossed the previous swing high of 17050 and filled the down gap made on 14 February 2022. Upside acceleration towards the 17800 levels is likely once the Nifty takes out the downward sloping trend line that has held down the highs of 02nd and 10th February 2022. It is important that in case of any corrections, Nifty must hold the support of 17224; else the bears could once again gain an upper hand.

Reliance Industries is in an intermediate uptrend as it continues to make higher tops and higher bottoms over the last several months. After correcting recently and finding support at the 2305 levels, the stock bounced back on Tuesday on the back of healthy volumes. In the process, it has broken 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 bounced back and are in rising mode now. The Relative Strength Comparative indicator too is beginning to move higher, indicating 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 move higher in the coming weeks and therefore recommend a buy between the 2400-2420 levels. CMP is 2407.65. Stop loss is at 2325 while targets are at 2625.

Buy Asian Paints

Asian Paints has shown relative strength this week. While the Nifty index has lost 0.47% this week, Asian Paints has gained 0.81% over the same time period. In the process, the stock has also broken out of its recent trading range on the back of above average volumes.

Technical indicators are giving positive signals as the stock trades above the 20 day SMA and 200 day EMA. Daily momentum indicators like the 14-day RSI too have bounced back and are in rising mode now, which augurs well for the uptrend to continue.

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

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)