Nifty outlook & stock ideas by Sameet Chavan: Buy Cigniti Tech, SBI Life

Considering the recent market behaviour, it is pretty clear that the bulls are not willing to loosen their firm grip so easily

Nifty started last week on a positive note and witnessed momentum to reclaim the 17,700 mark with ease. On Tuesday, the global markets were a bit nervous, but still, we managed to shrug off the negativity and rallied higher to surpass the 17,800 mark. However, one day ahead of the weekly expiry, our markets finally reacted to the global weakness. The index consolidated throughout the first half but witnessed a sharp rebound post mid-session to end the day tad above 17,600. The opening on the expiry day was absolutely a shocker for the bears as the shaky global markets recovered overnight and remained firm thereafter. As a result, the Nifty continued its march towards the recent highs.

The RBI governor announced its monetary policy on Friday and the outcome was very much in line with the general consensus. Markets did not look much excited as it turned out to be a non-event. There was no follow up seen in key indices throughout the remaining part of the session.

Eventually Nifty ended the week around the 17,900 mark, which is the highest ever close for our markets. Considering the recent behaviour, it is pretty clear that the bulls are not willing to loosen their firm grip so easily. But we reiterate that it may not be easy to participate in this phase of the market. We are not convinced about trading aggressively on the long side at this moment. Although there could be odd thematic moves that can be focused on but do not go all guns blazing at such elevated levels.

As far as levels are concerned, 17,900 – 17,950 remain to be a sturdy wall and on the flipside, 17,600 has become sacrosanct support. The way we are following the US markets of late, all eyes are on how they move going ahead. Also, as far as BANK NIFTY is concerned, nobody knows what it is up to -- clearly directionless and is flirting around key support as well as resistance levels. The IT heavyweight TCS is going to flag off the result season. Let’s see if any exciting outcome from this pushes Nifty beyond 18,000 or not.

Stock recommendations

1. NSE Scrip Code – CIGNITI TECHNOLOGIES
View – Bullish
Last Close – Rs 626.40

Justification – On Friday, the entire IT space was on a roll just ahead of the TCS numbers. Mostly, ‘CIGNITI TECHNOLOGIES’ does not come into our recommendation list but the way this smaller IT name moved on Friday, it has certainly caught our attention. On the daily time frame chart, we can witness a series of higher highs, higher lows and now the momentum oscillator like ‘RSI-Smoothened’ is sloping upwards, which is a sign of strength. We recommend buying for a short term target of Rs.670. The stop loss can be placed at Rs.602.

2. NSE Scrip Code – SBI LIFE
View – Bearish
Last Close – Rs 1196.45

Justification – Most of the insurance-related stocks have been enjoying their strong Bull Run over the past few months. Since the March lows, this stock has given a stupendous move as we can see two-fold returns in a span of merely 6 months. Although this stock does not have a habit of going through a corrective patch for a long time, we can see some signs of weakness in the near term. Due to last three days’ decline, the stock prices have slipped below their key short-term moving averages. Hence, we expect this correction to extend in the coming week. One can look to sell on a bounce around 1,210 - 1,220 for a target of Rs 1,150. The strict stop loss is to be kept at Rs 1,236.