10,426 a key support level for Nifty today: Angel Broking

Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:
 
Nifty Outlook
 
The concluding week of the year traded with a positive bias and eventually wrapped up the activity almost at record close. This has been a remarkable year for Indian markets; in fact, we should put it as, for the equity markets across the globe. The Nifty clocked whopping gains of ~29% in the calendar year 2017 and probably we can count on the fingers of our one hand such spectacular years in the history of Indian markets.
 

Undoubtedly, the year belongs to mighty bulls as we saw massive wealth creation right from the word go. There were couple of hiccups during the year; but they eventually turned out to be whipsaws as the index kept on enjoying its Bull Run to eventually conclude the year at record highs. Now, whatever has happened in 2017 is a history, the question lies what’s next and is the same run going to continue in the New Year?

 
If we look at it from a longer perspective then there is no second thought about the continuation of this Bull Run towards 11000 and beyond. But, we do not expect the journey to be as smooth as it has been throughout this year. In between we are likely to see decent pauses and hence, one needs to be prepared for it; because timing such halts has become a nightmare. Any decent declines during the year remain to be a good buying opportunity for investors having longer term horizon. On the other hand, short term traders need to be very agile and selective while picking their trades. For the coming week, 10552 – 10600 would be seen as next junctions, where we can see traders taking some money off the table. On the downside, 10460 – 10426 are the levels to watch out for.

 
Stock recommendations:
 
Tata Sponge - Bullish
Last Close – Rs. 987.75
 
Since last three months, this stock has been consolidating in a narrow range. During this consolidation, there were various attempts to surpass the 980 mark and every such attempt got sold into. Now finally, the stock managed to surpass this hurdle convincingly along with sizable volumes. Thus, we expect this optimism to continue in days to come. We recommend buying this stock at current levels for a target of Rs.1054 over the next 5 – 10 sessions. The stop loss should be fixed at Rs. 947

 
Sun Pharma - Bullish
Last Close – Rs. 571.15
 
We have been quite upbeat on the ‘Pharmaceutical’ space since last couple of months and have been consistently recommending some popular names like, Wockhardt, Cipla, and Divislab along with ‘Sun Pharma’. The other names did well during this period; but, somehow ‘Sun Pharma’ remained laggard. Finally, last week, we saw this stock surging to a great extent which resulted into a breakout from the multiple price patterns. The volume activity too picked up substantially, providing credence to the price action. Considering the rising slope of ‘RSI-Smoothened’ above the 70 mark and the ‘ADX (14)’ line from the flat territory, we expect the stock to give good price appreciation in short as well as medium term. We recommend buying this stock at current levels for a short term target of Rs.648. The stop loss should be fixed at Rs. 525.

 
Voltas - Bearish
Last Close – Rs. 655.90
 
This stock has been enjoying its stellar run since last twelve months and is now trading around its 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 sessions, the stock has been struggling to sustain around 670 and despite market closing at historical highs, the stock remained under pressure. Technically speaking, if we combine Wednesday’s and Thursday’s price action, jointly it can be construed as a ‘Dark Cloud Cover’. The said pattern has a negative implication if the low of the lowest candle is breached. We anticipate it to happen and thus, recommend selling at current levels for a short term target of Rs.612. The stop loss should be fixed at Rs. 671.

 
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.