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Time-wise pain continues, focus on individual stocks
Yet another week ended with lethargic movement for the index and in fact, the overall daily range has shrunk further to merely 50 points, which is really a tiresome thing for the traders preferring index specific trades. Eventually, the week concluded with neutral bias by defending the 9,900 mark convincingly; keeping both counterparties perplexed moving to the next week.
Looking at such price activity, it appears that markets are awaiting some trigger to confirm the clear direction in the near term. Technically speaking, the way index has narrowed down its trading range, it’s a sign that the volatility would increase soon; resulting into a probable breakout in either direction. If we have to guess any one direction, we would certainly go with our recent cautious stance on the market. One of the notable observations to support this view is the negative placement of ‘RSI-Smoothened’ on weekly chart. Having said that one must understand the fact, it’s very difficult to time such predictions and hence, at present, one should keep tracking key levels for the index i.e. 10,000 and 9,860.
Meanwhile, trades can keep focusing on individual stocks that are providing better trading opportunities. It would be a prudent strategy to stay light once index reaches higher end of the range and should ideally be prepared with a proper exit strategy.
ICICI Prudential Life Insurance
View – Bullish
Last Close – Rs 437.60
We witnessed a good price appreciation in this stock immediately post its inception. However, the counter slipped into a consolidation mode after posting a new high of 505.79 in the month of July. The stock spent some time around 420 – 425 as the key short term moving average (89) provided a rock solid support in the recent correction. During the penultimate week, we witnessed a good positive traction along with tremendous buying interest in the stock. Considering the ‘u-turn’ in daily ‘RSI-Smoothened’, we expect the stock prices to resume its higher degree uptrend. Hence, we recommend buying this stock at current levels for a target of Rs 469 over the next 14 – 21 sessions. The stop loss now should be fixed at Rs 422.
View – Bullish
Last Close – Rs 175.95
We have been quite upbeat on this stock ever since it has broken out from the previous hurdle of 136 with substantial volumes. Since then it’s been giving series of breakouts after every consolidation. Similarly on Friday too, we witnessed yet another breakout from the near term congestion zone along with sizable volumes; indicating renewed buying interest in the counter. The said price development in technical terms can be called as a breakout from the ‘Bullish Flag’ pattern. Hence, we recommend buying this stock on declines around 172 for a target of Rs 190 over the next 14 – 21 sessions. The stop loss should be fixed at Rs 162.
View – Bearish
Last Close – Rs 123.35
We have been closely tracking this stock since last three weeks. Post recent smart recovery from 101, the stock prices slipped into a consolidation mode and within this, every attempt to surpass the 130 mark was getting sold into. Finally, the stock had to surrender to recent selling pressure and as a result, we saw pessimism getting aggravated after sneaking below the recent support of 126.50 on Friday. This indicates weakness to continue in coming days as well. We recommend selling this stock on minor bounce around 125 for a target of Rs 116 over the next 5 – 10 sessions. The stop loss should be fixed at Rs 129.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.