Keep booking profits on a regular basis: Sameet Chavan of Angel Broking

Some positivity across the globe, Nifty surpasses 9,200

The previous week’s spectacular rally was followed by a sluggish start for the new trading week on Monday. The index consolidated with mildly negative bias. Similar action was seen in the subsequent session as well. On Thursday, the index opened lower and then had a decent recovery to close tad below the 9,000-mark. However, the real action of the week was mainly seen on Friday as we had a massive gap-up opening, followed by indecisive swings throughout the first half. During the latter half, strong buying emerged across the board to conclude the week well above 9,200 by adding a couple of per cent gains to the bulls’ kitty.
 

Our market was clearly struggling at higher levels for the major part of the week but we also cannot deny the fact that the market was reluctant to fall as well. Every time the Nifty approached 8,800-8,850, buying tends to emerge, and finally, we saw surpassing of 9,200 on a closing basis. Technically, this development was crucial for our markets as we can now see the immediate base getting shifted higher from 8,000 to 8,650-8,800. On the flip side, this opens up the floodgates to extend this relief rally towards 9,500-9,800 in coming days. Importantly, the banking index, which has been the weakest link of late, has finally made a strong comeback. This certainly provides credence to the move.
 

Apart from banking, the Auto index has shown some strength along with the midcap space which has been buzzing throughout the week. At present, traders are advised to keep following stock-specific approach and since we are still not completely out of the woods when it comes to the Coronavirus pandemic, one should keep booking profits on a regular basis.

Stock recommendations:

NSE Scrip Code: ICICI BANK

View: Bullish

Last Close: Rs. 375.25

Justification – In the recent mayhem, most of the all-time rank outperformers from the ‘Financial’ space have taken it on the chin and have corrected ferociously, marking one of the most brutal corrections in the history. This marquee private banking name plunged nearly 50 per cent in merely 20 trading sessions; which is quite abnormal. Now, after consolidating for couple of weeks around multi-year supports, the stock has shown the first sign of revival. On Friday, we witnessed a stellar move and in the process, the stock price confirmed a breakout from recent congestion zone and also surpassed 20-DAY EMA for the first time in many days. Thus, we recommend going long on a decline around 365 for a positional targetof Rs. 395-402 in the coming days. The stop loss can be placed at Rs.348.

NSE Scrip Code: MARUTI

View: Bullish

Last Close: Rs.5505

Justification – The ‘Auto’ sector has undergone a tremendous stress over the past few months, but finally there was some sigh of relief for traders trapped in some of the marquee names within this space. Maruti's stock had nosedived in the recent sell-off and in the process, tested the multi-year lowest levels at 4,000. However, the last couple of weeks were excellent for this automobile giant as we saw a colossal rally of nearly 40 per cent from the low. Technically, the stock has managed to surpass the ‘20-day EMA’ with ease and, now, looking at the placement of the ‘RSI-Smoothened’ on daily chart, we expect the stock to continue its relief move. The stock can be bought on a decline towards 5,400 for a target of 5,900 over the next few sessions. The stoploss can be placed at Rs. 5,140.
Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking Ltd. The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst