Immediate support for Nifty seen at 10,240-10,123: Angel Broking

Few trading ideas by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:

Nifty Outlook:

Merry days continued for our market immediately post the festive week. Barring negligible cut on Friday, the index kept marching higher during the week and eventually reached yet another milestone of 10,300. There have been various heroes in this year’s relentless run; but, this week, undoubtedly all credit should go to laggards (PSU Banks), which turned into gold overnight by clocking whopping gains of more than 30% in a single day. 

Honestly speaking, it’s very difficult to digest such kind of unstoppable move; but eventually we have to accept that markets are always superior and smarter. Looking at the daily chart, we can only project higher levels by taking a reciprocal retracement of the recent down move. As per this tool, the 127% and 161% ratios are placed at 10,310 and 10,482, respectively. Hence, this range would now be considered as immediate range in the upward direction. On the flipside, 10,240-10,123 is seen as immediate and key support area for the Nifty. 

At this juncture, traders are advised to not to take aggressive positions in index as we would see some kind profit taking coming in at higher levels. Within this consolidation phase, one should rather keep focusing on individual stocks that are offering better opportunities. 

Stock recommendations:

1) Wockhardt

View: Bullish

Last Close: Rs 662.85

The entire ‘Pharmaceutical’ space was on a roll last Friday and this was certainly one of the leading counters. The stock has managed to confirm a decisive breakout from the recent congestion zone accompanied by sizable volumes. In the course of action, the stock prices traversed the ‘200-day SMA’ placed around Rs 655. Going ahead, we expect continuation of this optimism and hence, we recommend buying this stock at current levels for a target of Rs 718 over the next 14-21 sessions. The stoploss now should be fixed at Rs 627.

2) Sun TV

View: Bullish

Last Close: Rs 843.45

Of late, we witnessed some consolidation in this stock and finally, the stock prices broke out from the falling trend line on Friday on an intraday basis. The volume activity picked up during this move; indicating decent buying interest in the stock. Thus, we expect this breakout to get confirmed on a closing basis as well. One can buy this stock for a target of Rs 892 over the next 14-21 sessions. The stop loss should be fixed at Rs 815.

3) GSFC

View: Bearish

Last Close: Rs 155.05

This stock has clocked massive rally over the past 3-4 weeks as we saw decent recovery from recent lows of Rs 125. On Friday, we witnessed some profit-booking at higher levels after reaching the 127% reciprocal retracement of the recent down move. This eventually resulted into a formation of ‘Shooting Star’ pattern, which certainly does not bode well for the bulls. In addition, due to this price development, we can probably see a confirmation of ‘Wolfe Wave’ pattern; indicating profit booking to extend in days to come. One can short sell this stock for a target of Rs 146 over the next 5-10 sessions. A strict stop loss should be followed at Rs 160.

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