11,640 - 11,700 are the levels to watch out for the Nifty: Angel Broking

Bullish on Tata Motors, RBL Bank, says Angel Broking

Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:

Mostly, in a strong uptrend, if the market has to undergo some kind of correction, we see that pain coming out in the first half of the week and the latter part tries to make up for the damage. A similar thing was witnessed during the week, the index first took a nosedive from Monday’s high and then remained under pressure; courtesy of relentless appreciation in US Dollar against the Indian Rupee. Until last week, our markets could handle up to the 71-mark; but the moment this level crossed, it called for some kind of panic in the traders’ fraternity. But, fortunately, the end was good for the week after dollar-rupee cooling off a bit and hence, Nifty managed to recoup some losses to close tad below the 11,600-mark. 

Technically speaking, we did witness a ‘Bullish Hammer’ pattern getting formed during the midst of the week and it has shown some significance. But now, the first half of the forthcoming week would be quite crucial in order to draw the immediate route map for the market. The index will have to convincingly traverse the strong resistance zone of 11,640 – 11,700, if it has to gain some real strength in the near term. It looks possible considering the broader market participation; but as a trader, one needs to be closely tracking how index behaves around those important levels. On the lower side, 11,484 followed by 11,436 would now be seen as immediate and crucial supports. 

At this juncture, a strategy would be to focus on individual pockets that are providing better trading opportunities. As far as the sectoral watch is concerned, the ‘Metal’ pack was on a roll and considering the positive chart structure of ‘Nifty Metal’ index, we expect further legs to unfold in this space. Apart from this, after some early damage, the midcap index has managed to recover a fair bit of ground in the last couple of days and hence, do watch out for more action in this universe as well. 

Stock recommendations:

1. RBL Bank

View – Bullish

Last Close – Rs 609.75

This has been clearly one of the top outperforming stocks within the midcap private banking space. Recently, this stock managed to clock new highs despite some of its peers lying around their 52-week low. The higher degree time frame charts are extremely strong and hence, recent correction in the stock can be interpreted as a profit booking move. In this course of action, the stock prices managed to find support around its previous breakout points and eventually, attracted a strong buying interest; hinting towards a possibility of resuming its larger degree uptrend. Hence, one can look to go long for a target of Rs 642 in coming days. The stop loss can be fixed at Rs 587.

2. Tata Motors

View – Bullish

Last Close – Rs 277.40

The stock has been a laggard since the last couple of years and despite benchmark seeing massive appreciation in this period, the stock is trading around its five-year low, which is certainly a disaster for so many investors. Now, recently, prices consolidated and has formed some near-term base for the stock. On Friday, we witnessed a breakout from this congestion zone along with considerably higher volumes. Hence, we expect the stock to give some relief rally in days to come. One can look to go long for a positional target of Rs 394 in coming weeks. The stop loss can be placed at Rs 269. 

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