Short term market outlook remains positive: Devang Shah

NIFTY
CLOSE- 8683.15 (05.08.16)

Market managed to hold short term support levels near recent lows & sharply bounced back from these levels. It made a low of 8518 levels on nifty & 27,627.97 levels on sensex. It also closed weekly in positive territory at the end of weekly trading session. It turned out to be ending diagonal pattern as per hourly chart of nifty indicating possibility of short term trend reversal. One can expect market to trend towards higher levels targets in short to medium term as mentioned below till trend reverses.

Market is not making any major correction in short term. It’s consolidating & starts further rally for higher levels targets. It’s difficult for traders to capture short term view in such kind of overall trending market. I would advices as mentioned many times in my outlook that any kind of short term correction or consolidation can be used as buying opportunity to participate in this rally for higher levels targets in medium term.

Short term outlook for the market remains positive nifty trades above 8476 levels & expecting targets in the range of 8800-8850 levels in short term. Medium term outlook for the market remains positive till nifty trades above 7927 levels & expecting targets in the range of 9120-9400 levels in medium term.

Bank nifty also managed to hold lower end support as expected. It made a low of 18,526 levels & started to rally from these levels. It closed near crucial resistance of 20,000 levels. Sustain above these levels will open higher levels targets towards all time higher levels of 20,700-20,900 levels in short to medium term from wave count perspectives.

Momentum indicators Daily KST & DAILY MACD both are in sell showing weakness may create volatility in short term. 8500/9000 levels looks strong supports & resistance levels respectively based on derivative option open interest data for this month series at current levels of market. One should buy stock specific & follow trend till it reverses in short term.

Stock Picks:

LIC HOUSING-BUY

Target: Rs 537/550

Stop Loss: Rs 502

LIC HSG closed weekly in positive territory. It completed short term consolidation. Its momentum indicators are in BUY. It closed above 40 DMA. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 502 for the target of Rs 537/550 levels in short term.

L&T FINANCE-BUY

Target: Rs 95

Stop Loss: Rs 84

L&T Finance is outperforming in short term. It closed weekly in positive territory. Its momentum indicators are in BUY. It has still wave-V up pending on daily chart. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 84 for the target of Rs 95 in short term.

BEL-BUY

Target: Rs 1315

Stop Loss: Rs 1224

BEL closed weekly in positive territory. It has completed short term correction. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 1224 for the target of Rs 1315 in short term.

TCS-BUY

Target: Rs 2720/2770

Stop Loss: Rs 2577

TCS closed weekly in positive territory. It has completed short term correction. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 2577 for the target of Rs 2720/2770 in short term.

VEDANTA-BUY

Target: Rs 177/182

Stop Loss: Rs 162

Vedanta closed weekly in positive territory. It has completed short term consolidation. It has wave-V up pending on upside for higher levels targets. It closed above 20 DMA. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 162 for the target of Rs 177/182 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.