Sameet Chavan of Angel Broking is bearish on Bajaj Finance; check why

Bajaj Finance: The daily chart depicts three back-to-back 'Doji' candles and the first one specifically can be termed as a 'Gravestone Doji'

We had a bumper opening last Monday (August 30) at new record highs citing cheerful mood across the globe. This head start certainly set up the tone for the entire week as markets didn’t look back from thereon. The benchmark NSE Nifty recorded a new high on each day of the trading week and in the process crossed another milestone at 17,000.

In fact, the Nifty witnessed a continuation of the upward trajectory in last couple of sessions; courtesy to stellar comeback from heavyweight Reliance Industries who single-handedly propelled Nifty beyond 17,300. Eventually, it happened to be yet another spectacular week for our markets as the bulls added another 3.7 per cent to its kitty.  
 

Nifty has been enjoying a strong Bull Run since last 16 – 17 months and in the last few weeks also, it gave some mesmerizing moves. Although the recent momentum has been exceptionally strong, we can see some extreme levels in benchmark index now. If we take a broader view, we can see Nifty reaching the 200 per cent ‘Fibonacci Retracement’ of the last year’s massive decline from January 2020 high to March 2020 low.

Also time-wise, Nifty has entered 7th zone as per ‘Fibonacci Time Series’ on the monthly time frame chart. We do not want to sound pessimistic but since couple of important key ratios are coinciding at current juncture; it would be unfair to overlook them. To be on the safer side, we advise traders to keep booking profits in the rally and avoid taking aggressive longs for a while. Yes, momentum traders can still continue with their stock specific trades, but need to follow strict stop losses and booking timely profit is advocated.

As far as levels are concerned, 17,400 – 17,500 are to be considered immediate hurdles; where we would certainly avoid being complacent. On the flipside, 17,200 – 17,050 are to be seen as key supports for the forthcoming week. The first sign of weakness would start below 17,000 after which the crucial make or break support zone of 16,700 – 16,600 would be tested.

Stock recommendations:

NSE Scrip Code – Bharat Electronics (BEL)

View – Bullish

Last Close – Rs 198.60

This stock had a massive price drop in the first half of August from its multi-year highs of Rs 190. The fall got arrested around the cluster of key short term moving averages as well as the previous breakout points. After forming a strong base around Rs 160, the stock price resumed its higher degree uptrend. In last three weeks, we witnessed a V-shape recovery in the stock which eventually extended on Friday. As a result, we can see this stock registering a fresh high and is knocking the door of Rs 200. We recommend buying for a short term target of Rs 214. The stop loss can be placed at Rs 189.80.

NSE Scrip Code – BAJAJ FINANCE

View – Bearish

Last Close – Rs 7,523.40
 

This stock is in a different league altogether and has proved its worth over the last decade or so. All significant declines over the years have been bought into and this stock has not disappointed even once. Taking a glance at the recent performance, we can see stock price taking-off in the latter half of August after undergoing a small patch of consolidation. The higher degree trend undoubtedly remains strongly bullish but the way stock behaved in last three trading sessions indicates some exhaustion. The daily chart depicts three back-to-back ‘Doji’ candles and the first one specifically can be termed as a ‘Gravestone Doji’. This pattern has a negative implication if we see the stock closing below the low of the candle i.e. Rs 7,483. We are pre-empting this to happen and hence recommend selling with a strict stop loss of Rs 7,600. The immediate target can be seen in the range of Rs 7,340 – 7,300.

========================

Discalimer: Sameet Chavan is Chief Analyst- Technical & Derivatives, Angel Broking. Views expressed are personal.