Short term correction is a buying opportunity: Devang Shah

NIFTY
CLOSE- 8866.70 (09.09.16)

Market closed 2nd consecutive week in positive territory. It has extended on upside as expected last week. It made a high of 8968.70 levels on nifty & 29,077.28 levels on sensex so far in this rally. It looks like wave-(v) of III to extend further towards higher levels targets in short term. As market is extending towards all time high levels, one can’t rule out profit booking from these levels. But any kind of profit booking or short term correction/consolidation is buying opportunity from medium term perspectives.

All the other indices such as midcap, small cap & Bankex etc closed weekly in positive territory. AS NSE MIDCAP & BSE SMALL CAP is breaking out their 2008 high after 8 years & by looking at current structure of main index (NIFTY/SENSEX), it looks like “LET THE PARTY ROCKS FURTHER”, therefore revising today medium term targets & stop loss levels on indices as below.

Short term outlook for the market remains positive nifty trades above 8543 levels & expecting targets of 9120-9200 levels in short term. Medium term outlook for the market remains positive till nifty trades above 7927 levels & expecting targets in the range of 9400-9700-10000 levels in medium term.

As mentioned earlier, reiterating two things once again that MIDCAP & SMALL CAP stocks is outperforming at current levels & also continue to outperform in this rally ahead. Secondly, “BE INVESTOR NOT TRADER TO TAKE ADVANTAGE OF SUCH KIND OF MARKET”. One should Trail stocks with stop losses to take advantage of full rally rather than profit booking with smaller gains.

Bank nifty also extended on upside as expected. It made a high of 20, 649 levels so far in this rally. One can expect it to extend towards 21,450 levels in short term & 22300/22400 levels in medium term. Any kind of decline or consolidation is a buying opportunity for BANK NIFTY from medium term perspectives. 18300 is strong support for BANK NIFTY in short term.

 Momentum indicators Daily KST & Daily MACD both are in BUY supporting short term trend. 8600/9000 looks strong support & Resistance levels respectively based on derivative option open interest data so far in short term for this month expiry series.One should be stock specific & follow trend till it reverses in short term.

Stock Picks:

KOTAK BANK-BUY
Close- Rs 821
Target- Rs 850
KOTAK BANK is outperforming in short term. It looks like extension of rally in short term. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 788 for the target of Rs 850 levels in short term.


IOB-BUY
CLOSE- Rs 28
Target- Rs 33
IOB closed weekly in positive territory. It’s managed to hold 40 DMA. It looks like end of short term consolidation. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss Rs 25 for the target of Rs 33 in short term.

BPCL-BUY
CLOSE- Rs 586
Target- Rs 635
BPCL is outperforming in short term It’s closed above 20 DMA. Its consolidating in thin range in short term. Risk reward is favourable to BUY at current levels. One can BUY with stop loss Rs 559 for the target of Rs 635 in short term.

ASHOK LEYLAND -BUY
CLOSE- Rs 87.30
Target- Rs 91/93
ASHOK LEYLAND closed weekly in positive territory. It looks like end medium term correction. Its momentum indicators are in buy. Risk reward is favourable to BUY at current levels. One can BUY with stop loss Rs 83.45 for the target of Rs 91/93 in short term.

The author is Portfolio Manager- PRO TECH-PMS at Sharekhan

Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.