Hot Stocks | RPG Life Sciences, Arvind Fashions, Jubilant Ingrevia can give up to 18% return

Nifty has been consolidating in the range of 16,150-16,350 for the last three consecutive sessions.

On August 3, Nifty registered a breakout from the huge consolidation which held the range of 15,500-15,963 for almost two months.

Sometimes, previous resistance interchanges its role as a support and the same is the case with the Nifty at present.

Earlier resistance of 16,000 would act as a support for the Nifty. The near-term target should be in the range of 16,450-16,500.

This target is derived from adding the gap between the previous consolidation and the breakout levels.

In the recent breakout of the market, Bank Nifty and financial service indices took the lead and broke out decisively on their medium-term charts.

We expect these indices to outperform further from here. IT and metal indices are in continuation of an uptrend.

Smallcap and midcap indices have lost the steam and turned weak on the short-term charts. Daily RSI exited the overbought zone with a big negative divergence which signals the weakness in these indices.

So, for the short term, we can expect largecaps to outperform the mid and and smallcaps.

The advance-decline ratio has been disappointing for the last four consecutive sessions. However, that does not mean the bull run has ended for the small stocks.

Many stocks are reacting to their quarterly results and it is going to be so till August 15. Once the result season is over, we may again see the stock-specific bullish trend in selective stocks in the mid and smallcap segments.

The last three session’s move in Nifty and Bank Nifty seems more like a temporary halt after a sharp rise. This can be seen as an opportunity to initiate fresh long positions.

To conclude, we believe that the choppy trend has ended in the largecap space. We can expect Nifty to hit an upside target range of 16,450-16,500 in the short span of time.

Post achieving this target, traders can hold longs with trailing stop-loss and ride the trend further. Nifty has got strong support in the range of 16,000-16,100.

Dips should be utilised to create fresh longs in largecap stocks. However, the real opportunity is seen in financial stocks and private banks, PSU banks and NBFC can outperform.

Traders should stay cautious in mid and smallcap segments as the short-term trend has turned weak.