Nifty outlook & stock calls by Angel Broking: Buy SBI Cards, Bharat Forge

One step at a time is the strategy to follow and better to timely book profits in the rally. Traders are advised to keep following stock specific moves and the base now remains at 10,660 - 10,560

11000 merely a formality, stay upbeat and keep booking timely profits

Last week was indeed an action packed week for our markets, rather, we should say for global markets. Trading started on Monday with a decent upside gap owing to favorable global cues. However, this turned out to be a formality as index gave up a major portion of its morning gains. This was followed by a bout of profit booking to mark one of the weakest sessions in the recent past. But the real action started from there on. On the following day, we witnessed a massive bump up at the opening; courtesy to smart rallies in global peers after the recent development on the vaccine. Everything looked hunky dory but post Reliance AGM; the stock took a nosedive and so as our markets. We were back to 10,600 but again the market had completely different plans as we witnessed a smart recovery first and then a consistent rally to conclude the week at new 4-months high.
 

Our markets saw a roller-coaster move throughout last week. In fact during the day also swings were wild, barring Friday’s session where we witnessed a unidirectional move (northwards). Now let’s see what charts have to say for the forthcoming sessions. We had anticipated a possible breakout from the sturdy wall of 10,850 during this week. Honestly, we expected it in the initial part of the week but we went through a correction first and hence, the conviction became stronger during the midst of the week about Nifty surpassing hurdle soon. Finally with today’s late surge in banking conglomerates, Nifty has confirmed a breakout above 10,850, which resembles a ‘Bullish Flag’ pattern on daily chart. Now, the banking seems to have regained strength which we believe should lead the move in the forthcoming week. As far as levels are concerned, the up move should ideally get extended towards the 78.6% retracement zone at 11,100 – 11,200.
 

In the previous weekly commentary, we had mentioned these levels and anticipated a possible correction after reaching these levels first. But since we have already seen a small decline early last week, we will have to reassess the situation whether the markets have further steam left to go beyond it or not. So from here on, one step at a time is the strategy to follow and better to timely book profits as well in the rally. Traders are advised to keep following stock specific moves and the base now remains at 10,660 – 10,560.

Stock recommendation: 

BHARAT FORGE

View: Bullish
 

Last Close: Rs 377.45
 

Last month, post its previous quarterly numbers, the stock prices took a nosedive to test the lower end of the ‘Broadening’ or ‘Megaphone’ pattern on daily chart. As per the requirement, the fall got arrested around it to form a reversal pattern, which resulted into a confirmation of 5th point. Since then this counter has been continuing its upward momentum. If we look at the daily chart now, we can see a formation of ‘Bullish flag’ pattern and the same has been confirmed last Thursday. Hence, Friday’s muted session can be construed as a good buying opportunity in the stock. We recommend going long for a positional target of Rs.405 in coming days. The stop loss can be placed at Rs.362. 

SBI CARDS

View: Bullish
 

Last Close: Rs. 755.95
 

This was one of the most popular and hyped IPOs in recent years and due to its unfortunate timing at the coronavirus outbreak, the listing was very disappointing for investors. In fact due to massive sell off thereafter, the stock prices plunged more than 30% in following weeks. However, after forming a strong base around 500, the stock has given a stellar move over the past couple of months along with the broader market recovery. Now, with Friday’s smart move, the stock has managed to give a highest ever close above the 750 mark. Although, the historical price data is not sufficient, the chart structure and volume activity looks encouraging. Hence, one can look to buy for a target of Rs.825 in coming weeks. The stop loss can be placed at Rs.712. 

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