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Stock calls and Outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:
Markets kick started on a positive note on Friday owing to decent overnight rally in the US bourses. Subsequently, index consolidated at record highs for initial couple of hours. However, a sharp decline during the midst of the session spooked intraday traders as we saw Nifty hastening towards the 10600 mark. By the time, everyone could realize how market corrected, we saw index taking a complete u-turn in the latter half to eventually close around its opening point at new highs.
Last session panned out exactly the way we had anticipated to. We had highlighted about index not finding similar sort of strength if manages to breakout in the upward direction. Also, the possibility of volatility increasing was on the cards. All these factors were seen during the session and due to smart recovery, the Nifty eventually ended the week on a high note. Now, the way index smartly recovered is generally considered as a good sign; but, due to wild swings, we can now see a copy book formation of ‘Dragonfly Doji’ on daily chart. The said pattern at higher levels does not bode well and hence, one needs to be closely tracking how markets behave in the first half of the week. Since, markets are reluctant to fall; we would rather wait for a confirmation to happen. The pattern will get activated below its low i.e. 10597 and hence, any sustainable move below this key support would extend further weakness in days to come. However, on the higher side, we would reiterate that the market looks a bit tired and hence, it would be a prudent strategy to keep booking profits and staying light on positions.
Now, due to Friday’s late recovery, the recent laggard ‘Bank Nifty’ is shaped up quite interestingly. We can see a major resistance of 25800 on this index. And the way ICICI bank closed with an uptick of nearly 3% along with the entire PSU banking basket hovering around major supports; we are likely to see make or break moves in the banking index quite soon. In case of a sustainable move beyond this crucial point (25800), the Bank Nifty would start outperforming benchmarks; but if it fails to do so, we can see strong profit booking happening with higher volatility.
Container Corporation of India
View – Bullish
Last Close – Rs. 1,432.25
Justification – Finally, after a long consolidation of nearly three months, the stock prices managed to surpass the ‘Horizontal Line’ resistance at 1400 along with sizable volumes. This was followed by some modest profit booking for couple of days. However, the way stock prices rebounded precisely after retesting the 1400 mark on Friday, we expect the stock to resume its upward trajectory in days to come. Thus, we recommend buying this stock for a target of Rs.1524 over the next 5 – 10 sessions. The stop loss should be fixed at Rs. 1390
View – Bullish
Last Close – Rs. 132.85
Justification – Last week, the stock prices broke out from its recent congestion zone around 130; indicating short term reversal for the stock. This price action was accompanied by significant rise in volumes, which is a sign of strong buying interest. Although, the stock came off a bit in last two days, we expect the stock to extend this rally by looking at the ‘RSI-Smoothened’ continuing its upward trajectory well above the 70 mark. Momentum traders can look to place their bets for a short term target of Rs.144. The stop loss should be fixed at Rs. 129.50.
View – Bearish
Last Close – Rs. 633.95
Justification – This stock has been enjoying its stellar run since last twelve months and has clocked new record highs. Undoubtedly, the longer term outlook remains strongly bullish as the overall structure looks quite sturdy. But, with a near term view; there are some early signs of exhaustions. Since last couple of weeks, we have been recommending going short at higher levels. The stock remained under pressure and has broken down from its important near term support of 640. Thus, we continue to recommend selling for a short term target of Rs.612. The stop loss now should be fixed at Rs. 644.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.