Market outlook & two stock ideas by Sameet Chavan of Angel Broking

Nifty started last week on a positive note as the global markets recovered, resulting in some positive sentiment. Market participants looked a bit perplexed on Monday, but the broader markets saw buying interest on Tuesday which led to an up move in the index and new highs. Over the next couple of sessions, Nifty consolidated within a range till expiry and it again resumed the momentum on the last day to end the week above 16,700.

In spite of the volatility in the midcap and the smallcap space, the index has managed to register new highs. Meanwhile, the broader markets got their mojo back as many stocks witnessed buying interest from their respective supports. The index continues to be in an uptrend and thus one should continue to trade with a positive bias and avoid taking any contra trades until any reversal is seen. The only concern that we have been highlighting is the banking index which has shown a relative underperformance for so long. But this index is still in a consolidation phase and has not breached its important supports. Hence, there's a good probability of some buying interest emerging in this sector which would then lead to further support to the benchmark. The immediate supports for Nifty are placed around 16,600 and 16,500 while the levels to watch on the upside will be 16,800 and then 17,000 mark. 

Recently, we have seen that when everything looks hunky-dory, there is some volatility due to stock-specific moves. Also how the global markets shape up in the near term due to events can have an impact on our markets. Hence, one should keep track of the global developments and also book timely profits in trading positions.

Stock recommendations:

NSE Scrip Code – CIPLA

View – Bullish

Last Close – Rs. 923.90

Justification: Some stocks from the pharmaceutical space have undergone a corrective phase in the last couple of months and this stock, too, has corrected from its recent highs. However, the medium chart indicates that the trend still continues to be bullish and hence this just seems to be a corrective phase within an uptrend. The price structure has turned positive, and the RSI oscillator has also given a positive crossover and is indicating a positive momentum. Hence, we expect the stock to rebound higher in the near term. We recommend buying the stock at the current market price for a short term target of Rs 960. The stop loss can be placed at Rs 902.

NSE Scrip Code – BPCL

View – Bullish

Last Close – Rs. 471.30

Justification: The stock has consolidated within a range of Rs 469 - 440 in the last couple of months. This entire consolidation was around its ‘89 DEMA’ support and now there are signs of a breakout from this consolidation on the higher side. The ‘Bollinger Bands’ which had narrowed recently have started to widen and prices are riding the upper end of the band which is a positive sign. Hence, we recommend buying the stock for a short term price target of Rs 496. The stop loss needs to be maintained at Rs 456.

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Discalimer: Sameet Chavan is Chief Analyst- Technical & Derivatives, Angel Broking. Views expressed are personal.