Consolidation phase in market, focus on individual stocks: Angel Broking

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

 

Nifty Outlook

 

The market continued its splendid run and now is showing some signs of exhaustion at higher levels. During the week, the Nifty saw some profit booking after precisely entering the strong resistance zone of 10,482 – 10,500 which was the 161% (Golden Ratio) reciprocal retracement level of the recent down move. This corrective move was very much on expected lines and in the process, corrected to end the week tad above 10,300-mark.

 

An impulsive upmove in the index is usually followed by a corrective phase; wherein the correction either turns out to be a time-wise correction or a price-wise correction. The index has completed an upmove near its resistance zone of 10,482-10,500 and has then showed a corrective phase during the week. In the coming week, we expect this consolidation/corrective phase in the index to continue wherein stock specific momentum would provide better trading opportunities on both side of the trade. Hence, traders should stay cautious and avoid taking aggressive bets on the index front.

 

As far as levels are concerned, the immediate support for the Nifty index is placed around 10,260, which if breached could drag the index up to 10,180 (38.2% retracement level of the recent rally and the previous breakout level). On the flipside, the resistance is seen around 10,380 followed by the recent high. We reiterate that traders should not take aggressive positions in the index and should rather keep focusing on individual stocks with a proper exit strategy.

 

Stock recommendations:

1. UJJIVAN                                                                                    

View – Bullish

Last Close – Rs 382.35

 

Post a corrective phase, this stock has been consolidating in a broad range since last few months. However, in last few trading sessions, prices have started moving higher with good volumes and have started forming a ‘Higher Top Higher Bottom’ structure. Also, if we observe the weekly chart, prices have given a breakout from a falling trendline resistance which is bullish for short to medium term.  The price-volume structure along with the mentioned breakout on the weekly chart would provide some impetus for next up move according to us. Hence, we recommend buying this stock at current levels for a target of Rs.430 over the next 14 – 21 sessions. The stop loss now should be fixed at Rs.362.

 

2.  HUL

 View – Bullish

Last Close – Rs 1,290.65

 

Of late, we witnessed some consolidation in this stock and finally, the stock prices broke out from the resistance of the recent consolidation phase. Since the broader trend for the stock is up, we interpret this consolidation as a time-wise correction within an uptrend. As the prices have given a breakout on Friday along with decent volumes and a bullish momentum reading, we expect the stock to resume its broader uptrend. One can buy this stock at current levels for a target of Rs.1365 over the next 5 – 10 sessions. The stop loss should be fixed at Rs.1240.

 

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