Largecaps to outperform small & midcaps in short term: Vinay Rajani

On August 24, Nifty registered an all-time high of 16,624 on a closing basis. For the last three trading sessions, Nifty has been registering higher lows, which indicates strength in the short term trend. After falling more than 10% from the month's high, Smallcap index showed pullback. However, we continue to believe that Largecaps would continue to outperform the small and midcap segment in the short term. Nifty is expected to surpass the intraday all-time high of 16,702. Longs should be held in Nifty with trailing stop loss. At present, stop loss should be kept at 16,400.

Stock recommendations:

Buy Reliance Ind (Rs 2,178): | Target: Rs 2,250 | Stop-loss: Rs 2,130

The stock is on the verge of breaking out from the “Pennant” pattern on the daily chart. It showed resilience when the markets were under pressure. Short-term moving averages are trading above medium-term moving averages. Infra and Energy Sector looks bullish on the short term charts. Furthermore, the stock has been forming higher tops and higher bottoms.

Buy ICICI Bank (Rs 693): | Target: Rs 725 | Stop-loss: Rs 668

After three weeks of correction, the stock seems to have resumed its primary uptrend. Bank Nifty has also started showing traction after huge underperformance against Nifty in the last couple of weeks. ICICI Bank has been one of the strongest stocks in the private banking space. It is now on the verge of breaking out from the bullish “Flag” pattern on the daily chart.

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Vinay Rajani is a Senior Technical and Derivative Research Analyst at HDFC Securities. The analyst doesn't have any holding in the stock. Views are personal