Short term outlook for markets remain negative, says Devang Shah

One should be stock specific & follow the trend with trail stop loss levels till it reverses

NIFTY

CLOSE-  Rs 6,980.95 (12.02.2016)

Market witnessed sharp sell last week beyond anticipation. It has broken crucial support of Rs 7,240 levels & achieved my medium term targets levels of around Rs 6,900 levels as expected long back. It made a low around Rs 6,869 levels on nifty. It closed 2nd consecutive week in negative territory. All the other indices such as midcap, small cap, Bankex etc also closed weekly in negative territory.

 It looks like completely collapse scenario from wave count perspectives like 2008 collapse climax case. Therefore, one should expect market to go down further, fast & furious in this collapse before it’s bottoming out. One should sell or exit in any kind of pull back rally till short term trend reverses.

Short term out look for the market remains negative till Nifty trades below Rs 7,240 levels & expecting target of Rs 6,650 levels in short term to medium term. Its very important support levels from medium term perspectives, break of these levels will lead to further sharp fast & furious sell off towards climax level targets of Rs 6,300 levels on nifty in medium term. Medium term out look for market remains negative till Nifty trades below Rs 7,600 levels.

 I feel its just trailer & we are going to see further lower levels in short to medium term before bottoming out. I would recommend, avoiding any kind of bottom fishing at current levels of market till we get short term reversal confirmation, as risk of collapsing for further lower levels targets across the market looks high to me.

BANK NIFTY is also showing possibly of further lower levels target till Rs 13,300-13,200 levels in short term. Broader market esp. BSE MIDCAP & BSE SMALL CAP Indices also broken bearish H&S pattern on down side after 20 Months of consolidation , it’s not a good sign at current levels of market. One can expect further selling pressure to continue on broader market as well in short term.

Rs 7,100-7,150 levels are crucial resistance levels for short term. Momentum indicators daily KST & daily MACD both are in sell, supporting short term trend. One should be stock specific & follow the trend with trail stop loss levels till it reverses. 

Stock Picks:

M&M: SELL

Close: Rs 1,168

Target: Rs 1,092/1,050
Stop Loss: Rs 1,185
 

M&M closed weekly in negative territory. It closed below 20 DMA. Its momentum indicators are in SELL. Risk reward is favourable to SELL at current levels.

BAJAJ AUTO: SELL
Close: Rs 2,311

Target; Rs 2,140
Stop Loss: Rs 2,335
 

BAJAJ AUTO closed weekly in negative territory. It closed below 20 DMA. Its momentum indicators are in SELL. Risk reward is favourable to SELL at current levels. 

BEL: SELL

Close: Rs 1,118

Target: Rs 1,050/1,018
Stop Loss: Rs 1,170
 

BEL closed weekly in negative territory.It has broken down of bearish head & shoulder pattern. Its momentum indicators are in SELL. Risk reward is favourable to SELL at current levels. 

L&T-SELL

Close; Rs 1,056

Target: Rs 1,000/980
Stop Loss: Rs 1,103
 

L&T closed weekly in negative territory. Its momentum indicators are in SELL. It closed below 20 DMA. Risk reward is favourable to SELL at current levels. 
 

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