Nifty outlook & trading ideas by CapitalVia: Buy HDFC AMC, Glenmark Pharma

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

Market trades lower on Friday, Nifty likely to take support at 8,000

The market traded with negative sentiment and witnessed weakness throughout the trading session on Friday. Weaker global cues and elevated crude prices triggered selling pressure in broader indices. Volatility index came lower by 8.38 per cent, which shows some relief to bulls as volatility is further likely to come down. Nifty managed to close at 8,083.80, slashing 170 points. Pharma and FMCG sectors traded with positive sentiments whereas private banks and technology sector closed in the red. Nifty bank closed at 17,249.30, slashing 365.85 points from the previous day’s closing.

As per weekly options data, handful of put writing on lower strikes ranging from 7,500 to 8,000 is seen which shows Nifty would face firm support in sub-8,000 zone. The level of 8,000 will act as support as maximum put Open Interest (OI) is placed here. But Nifty is likely to face stiff resistance at 8,500 as maximum call OI is placed here. We can witness further weakness only if Nifty breaks level of 8,000. Therefore, traders should try to create short position keeping a close eye on 8,500.

We can see a big momentum in following stocks: 

Buy HDFC Asset Management Company Limited (Above Rs 2,225)

Target: Rs 2,420

Stop loss: Rs 2,125

The stock is witnessing a reversal from lower levels of Rs 2,000. Further buying momentum would be witnessed if the stock moves above 2,225. Breakout from 2,225 would lead the stock to witness more upward movement. Considering the technical evidence discussed above, we recommend buying the stock above Rs 2,225 for the target of Rs 2,420, keeping a stop loss at Rs 2,125 on a closing basis.

Buy: Glenmark Pharmaceuticals Limited (Above Rs 220)

Target: Rs 245

Stop loss: Rs 205

The stock is forming a reversal pattern on daily charts along with forming inverted hammer candlestick on weekly candle. Breakout from its resistance placed at 220 would lead the stock to witness more upward movement. We recommend buying the stock above 220 for the target of Rs 245, keeping a stop loss at Rs 205 on a closing basis.

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