Short-term outlook for the market remains negative: Devang Shah

NIFTY 
    

CLOSE- 10893.50 (01.02.2019)

Market closed the week gone by in positive territory. It reversed sharply from lower end support levels and remained volatile due to Budget. Nifty is still trading in the range of 10,500-11,000 levels. It broke down from consolidation range on downside during the last week but once again made a further attempt to break these range on upside during the week ahead of Budget. It made a low of 10,630.95 levels during the week. But looking at overall broader market, it is showing weakness indicating short-term down trend till it proven otherwise, one can expect market to trend towards lower level targets as mentioned below till it reverses.

Short term wave count is not conclusive or keep on varying but overall medium term wave counts is still indicating on going correction is buying opportunity from medium to long term perspective. We have seen sharp sell-off, particularly, in the broader market in the recent trading session. It is underperforming at current levels of market and diverging from main indices (NIFTY/SENSEX/BANK NIFY) from very long period of time. These divergences have to end now in the coming trading sessions for overall medium to long term trend of market. It may remain in the broad range between 10,000-11,000 levels on Nifty for some more time in short term before giving breakout on the upside. 

Short-term outlook for the market remains negative till Nifty trades below 10,987 levels and we expect targets in the range of 10,500-10,300 levels in the short term. Medium-term outlook for the market remains positive till Nifty trades above 9,951 levels. We expect targets in the range of 12,500-12,800 levels in medium term.

BANK NIFTY has broken down from consolidation range on downside and finally confirmed short-term reversal. One should expect lower levels targets between 26,400-25,700 levels till it trades below 27,785 levels in the short term. 23,600 is strong support on Bank Nifty from medium-term perspective. Till it holds, one can expect higher levels targets in the range of 30,000-32,000 levels in medium term.

10,500 /10,700 and 11,000 levels are strong support and resistance levels, respectively based on option open interest data for current month series. Any kind of such short-term correction or consolidation is buying stock specific opportunity for medium to long-term Investment perspective till medium term reverses.

Momentum indicators Daily KST & DAILY MACD both came in to BUY showing strength but one should wait for price reversal to finally conclude short  tern reversal. One should be stock-specific and follow the trend with trail stop loss levels till it reverses. Close or sustain above short term reversal levels will finally confirm rally towards 11,300 levels on Nifty and 36,800-37,650 levels on Sensex in the short term.

Stock Picks: 
 

BEL – BUY
 

CLOSE – Rs 84.30
 

TARGET – Rs 94/100
 

BEL closed the week in negative territory. It looks like end of short-term correction. Its weekly momentum indicators are in BUY. Risk Reward is favorable to BUY at current levels. One can buy with a stop loss of Rs 79 for the target of Rs 84/100 levels in short term.

AXIS BANK – BUY
 

CLOSE – Rs 717.90
 

TARGET – Rs 750
 

AXIS BANK closed weekly in positive territory. It’s outperforming in short term. It managed to hold 20-DMA. It has broken out of consolidation range on upside. Its daily momentum indicators are in BUY. One can buy with a stop loss of Rs 678 for the target of 750 levels in short term.

Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst.

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