Nifty outlook and stock ideas by CapitalVia Global Research: Buy CEAT

Technical Calls by Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor

Market witnessed worst sell-off for the decade; All sectoral indices traded lower

The Indian markets performed poorly and global indices traded with weaker sentiments throughout last week due to Coronavirus concerns. Nifty closed at 11,201.80, shedding 431.50 points. Metal, technology, media stocks traded with negative sentiments as all sectors closed in the red. Nifty bank closed at 29,147.20, slashing 1039.80 points from the previous day’s closing.

As per weekly options data, huge call writing on higher strikes ranging from 11,300 to 11,500 is seen which shows Nifty is witnessing resistance in the sub-11,400 zone. Traders should be cautious in taking new positions as the 100-week EMA is placed at 11,211 which would be a crucial for the next week. For now, 11,500 will act as resistance as maximum open interest (OI) for the calls stands here. We can witness short-covering move along with addition of fresh position only if Nifty breaches 11,400. Therefore, traders should try to create shorts keeping a close eye on 11,400.
 

We can see a big momentum in following stocks: 

Buy: Avenue Supermarts Limited (Above Rs 2,380)

Target: Rs 2,490

Stop loss: Rs 2,299

The stock is forming an inverted hammer candlestick on daily chart and is trading above its important averages. A breakout from the level of 2,380 would lead the stock to bullish movement. Considering the technical evidence discussed above, we recommend buying the stock above 2,380 for the target of Rs 2,490, keeping a stop loss at Rs 2,299 on a closing basis.

Buy: CEAT Limited (Above Rs 1,045)

Target: Rs 1,098

Stop loss: Rs 999

The stock is witnessing resistance breakout from the level of 1045 which might lead the stock to show bullish movement. Further strength in the stock would result into a bullish movement if it sustains above 1045. Breakout from this level might lead the stock towards its next resistance zone placed around 1,100. We recommend buying the stock above Rs 1,045 for the target of Rs 1,098, keeping a stop loss at Rs 999 on a closing basis.

Disclaimer: The analyst does not hold position in any of the stocks mentioned above.