Nifty outlook and stock recommendations by Sameet Chavan of Angel Broking

If Nifty again slide below 13,626, we may see some corrective move in the concluding week of the current calendar year

Nifty Outlook
 

Despite being a truncated week, it was certainly an action packed as well as the volatile one for our markets, unlike recent weeks. On the inaugural day, Nifty marked a fresh record high of 13777.50 in the initial hours. However, post this, it just turned out to be a nightmare for the Bulls. The entire market just collapsed in a matter of a few hours on some global jitters to register the biggest intraday loss in the last few months. In the process, Nifty had a massive cut of more than 600 points to enter sub-13,200 levels. But, mighty Bulls were not willing to surrender completely as we witnessed a V-shaped recovery in the following three trading sessions to reclaim it's all time high territory. 
 

It appears that our markets over reacted to the global development on Monday but they also remained in the front in the recovery mode as well. It looks unrealistic but we have managed to shrug off the negativity and restricted the correction to merely one and half days. Technically, the low during the corrective move precisely met with a strong support zone of the '89-EMA' level on the '180-minutes' chart. And as we alluded in our intra-week commentary, although the fall was intimidating, it was merely a correction within the larger Bull market. We are now back to the record highs and the coming week would be quite crucial to understand whether the Nifty is heading towards 14,000 or not. A sustainable move beyond 13,780 - 13,800 would lead to a continuation of the move towards 14,000 - 14,200 levels. 
 

On the flipside, 13,626 is the level to watch out for. If we again slide below this support, we may see some corrective move in the concluding week of the current calendar year. Let see how things pan out because the last week of the year is generally considered a muted one in the absence of Foreign Institutional investors. This week mainly the defensive spaces like IT, Pharma and FMCG initiated the recovery, so it would be important to see what drives the market going ahead.

Stock recommendations:
 

NSE Scrip Code – BIOCON

View   –   Bullish

Last Close   –   Rs. 481.95
 

Justification – This week’s recovery was mainly led by the marquee defensive themes and Pharma is certainly one of them. Due to this week’s smart up move, so many counters from this space registered fresh record highs. ‘BIOCON’ did not stay behind as we witnessed a good ‘price-volume’ breakout on Wednesday from the multiple resistance zone around 480. A small pull back on the following day makes it more attractive when it comes to risk-reward ratio. Looking at the upward sloping ‘RSI-Smoothened’ oscillator, we expect the stock to do extremely well after entering an uncharted territory. Hence, we recommend going long for a target of Rs 518 in coming weeks. The stop loss can be placed at Rs 458. 

NSE Scrip Code – INDUSIND BANK

View   –   Bearish

Last Close   –   Rs. 852.80

Justification – This Private bank has underperformed significantly in pre-COVID times as well. Fortunately, we witnessed some decent recovery over the past few months along with the broader market. This week, stock prices saw some decent profit booking, which was due for the recent rally. The market did well after Monday’s hiccup but this stock did not have enough strength to recover its losses. The daily chart exhibits a bearish crossover in the combination of two key short term moving averages i.e. 5 and 20. Thus, we may see some further correction in the coming week as well. Traders are advised to sell for a target of Rs.805 in coming days. The strict stop loss can be placed at Rs.874. 

Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.