Nifty in uncharted territory; keep booking timely profits: Sameet Chavan

The August month started with a bang as we not only managed to reach the much-awaited milestone of 16,000 but also moved beyond it convincingly. This was followed by a quiet start on Monday, August 9. In fact, during the first three trading sessions of last week, our markets consolidated with some hint of profit booking at higher levels. Fortunately, the mighty bulls provided cushion at the lower range of 16,200 – 16,170 for the Nifty. On the weekly expiry day, we had a gradual up move to register a new all-time high at 16,375 which was then followed by a spectacular move in few heavyweights to reach the new milestone of 16,500 to conclude the week on a cheerful note.

The market looked a bit tentative in the first half this week, especially the broader market, as we witnessed a healthy correction in the Nifty Midcap 50 index. At one point, it was on the cusp of violating recent swing lows but fortunately got its mojo back slightly and managed to recover a fair bit of ground towards the end. Going ahead, things are going to get tougher because from hereon we are likely to see sector churning every now and then. Nifty has reached 16,500 without the participation of the banking space, which is hard to believe. So, it would be interesting to see how things pan out going ahead. Also, it would be unfair to expect a similar pace from Nifty to reach new milestones. Since there is no sign of weakness, we are not advising to go against the trend but we reiterate when things start to look hunky-dory everywhere, wise traders choose to take some money off the table. We second this as we advise continuing with one step at a time approach and keep booking timely profits in the rally.

As far as levels are concerned, the sacrosanct support is placed at 16,200 – 16,170 before which 16,400 – 16,300 are to be considered as immediate levels. On the upside, it’s hard to project any level as we have entered uncharted territory. Still, every 100 points rally from hereon should be treated as the upside range.

Stock recommendations:

NSE Scrip Code – LARSEN&TOUBRO

View – Bullish

Last Close – Rs 1,668.40

In the initial base-building process of the market last year (post March 2020 mayhem), a lot of stocks had an excellent recovery right from the word go. This heavyweight counter was muted all this while but once it entered November month, the momentum started to pick at a rapid pace. Since then there was no looking back as we witnessed a decent buying interest in all minor corrective moves thereafter. In fact, in the last couple of sessions, this marquee name was one of the major charioteers in sending Nifty beyond 16,500. This stock too has reached its new highs and the daily chart now exhibits a small ‘Rectangle’ pattern breakout. We recommend buying on a small decline for a short term target of Rs 1,740. The stop loss can be placed at Rs 1,624.

NSE Scrip Code – AMARA RAJA BATTERIES

View – Bullish

Last Close – Rs 729.25

This has been one of the worst-performing stocks from the Auto and Auto ancillary space. This is clearly visible when we look at Year to Date (YTD) performance of this counter. After shedding more than 20% in seven months, the fall seems to have arrested around its cluster of supports on higher degree time frame charts. On the weekly chart, we can see the completion of 50% retracement of the entire gigantic rally from March ’20 lows to January ’21 highs. In addition, we can see a formation of the ‘Bullish Hammer pattern precisely at this rock-solid support. The said, pattern has already been activated and hence, we reiterate buying for a revised short term price target of Rs 776. The stop loss now needs to be maintained at Rs 702.

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Disclaimer: Sameet Chavan is chief analyst- technical & derivatives at Angel Broking. Views expressed are personal.