Nifty fell sharply on April 19 as a record jump in COVID-19 cases and fresh restrictions in many states spooked investors.

Nifty ended the day with a loss of 258 points or 1.77 percent at 14,359. However, from the intraday low, it recovered 168 points.

Bank Nifty underperformed by plunging by 2.4 percent. However, from intraday low, it recovered more than 800 points.

All the sectoral indices closed in the red except Nifty Pharma which ended the day with a gain of about 0.2 percent.

Nifty is now placed below its 50 and 20-day exponential moving average (EMA) which is placed at 14,626 and 14,657 respectively, indicating a bearish trend for the short term.

The index is also trading below the support derived from the upward sloping trendline adjoining the bottoms of January 29, 2021, and March 25.

On April 12, Nifty opened the gap down and left the unfiled gap between 14,652 and 14,785. This gap is expected to remain resistance zone for the coming weeks. Unless this gap is filled entirely on a closing basis, the short-term trend of the market would remain bearish.

On the downside, Nifty is likely to find immediate support in the range of 14,100-14,190. In the worst-case scenario, Nifty could continue its downward journey towards the major swing low of 13,600 odd levels.

Sectors that are looking strongest on the medium to long term charts and are expected to outperform in the coming weeks are chemical, pharma and metals.

Earnings season has kicked in and there could be stock-specific movement ahead of the results.

Nifty Midcap and Smallcap indices have outperformed during the calendar year 2021 so far by rising 12 percent and 14 percent, respectively, against a 2.7 percent rise in the Nifty.

We expect their outperformance to continue for the coming weeks also. Therefore, the focus of the traders should be on mid and small-caps rather than the benchmark indices.

Here are three buy recommendations from the midcap segment for the next 3-4 weeks:

Elecon Engineering Company | LTP: Rs 68.90 | Target price: Rs 80 | Stop loss: Rs 64 | Upside: 16%

After forming double bottom around Rs 62, this stock reversed northwards yesterday to close above its 5- and 20-day EMA.

Volumes were sharply higher yesterday as compared to the last 10-day average. The primary trend of the stock is positive where it is trading above its 100- and 200-day EMA.

The stock price is forming a bullish higher top higher bottom candlestick pattern on the daily and weekly charts.

Kopran | LTP: Rs 128.50 | Target price: Rs 145 | Stop loss: Rs 118 | Upside: 13%

This stock has broken out from the downward slopping trendline adjoining the highs of December 30, 2020, and February 19, 2021.

It also surpassed the crucial resistance of Rs 127 yesterday with higher volumes to close at the highest level since January 21, 2021.

Plus DI is placed above the minus DI while the ADX line is placed above 25, indicating momentum in the current uptrend.

We expect midcap pharma stocks to do well for the short to medium term.

Indoco Remedies | LTP: Rs 320.50 | Target price: Rs 350 | Stop loss: Rs 300 | Upside: 9%

This stock has broken out on the daily line chart with higher volumes where it closed at the highest level since February 04, 2021.

It has formed a strong base of around Rs 275 where it took support multiple times.

Plus DI is placed above the minus DI while the ADX line is placed above 25, indicating momentum in the current uptrend.

Oscillators like RSI and MFI are showing strength in the current uptrend of the stock.

(The author is a technical research analyst at HDFC Securities)

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