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

Recommends buying DHFL, M&M, L&T, Tata Chemicals and powergrid

NIFTY     
CLOSE- 10696.20 (01.06.2018)
 
Market closed weekly in positive territory. It consolidated in narrow range during the week. It made a low of 10558.45 levels & high of 10,764.80 levels on nifty during the week. It looks like triangular consolidation kind of possibility as preferred wave count alternate in short term. Any kind of decline or short term consolidation is stock specific buying opportunity till short term reverses. One can expect higher levels targets as mentioned below in short to medium term.
 
Alternatively, Nifty has resistance around 10800-10900 levels, failed to sustain above these levels will open up alternate possibility of bigger triangular consolidation structure in wave-IV as per chart attached. It’s not my preferred alternate at current levels of market but one should closely watch out market behaviour at higher levels to finally conclude the same.

 

Short-term outlook for the market remains positive till Nifty trades above 10,417 levels and expecting targets in the range of 10,900-11,000 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,968 levels and expecting targets in the range of 12,000-12,200 levels in medium term.
 
Broader markets, particularly Midcap & Small cap Indices are underperforming at current levels of market. It’s actually point of pain for everybody as far as portfolio’s are concerned. According to me, all these indices are at lower end of channel crucial support levels in this wave-IV Correction as per chart attached & it can reverse any time soon. It’s a very good opportunity to build up portfolio in such kind of quality midcap/ small cap stocks at current levels. One should watch out broader market behaviour at these crucial levels in coming trading session next week to take further clue on overall trend of market.

 
Nifty Bank closed weekly in positive territory. It has extended on upside as expected last week. It’s still outperforming at current levels of market. It made a high of around 27058.20 levels. It looks like impulsive 5 wave advance structure on daily chart . One can expect higher levels targets around 27,700 levels till it holds crucial support of 25550 levels in short term & further above 29,600-30,000 levels in medium term. Any kind of decline is also buying opportunity for bank nifty for short to medium term perspectives.
 
10,200 & 11,000 levels is strong support & resistance levels range respectively based on option open interest data for current month series. Market will remain very volatile ahead of RBI Policy next week. By looking at current structure, I feel market is going to surpass all time high soon on main indices & this rally will have time wise consolidation rather than price wise correction in short term. Any kind of such short term correction or consolidation is buying opportunity for medium to long term Investment perspectives till medium term reverses.

 
Momentum indicators Daily KST are in buy and daily MACD are in sell indicating volatility to continue in short term. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close below short term reversal levels will lead to sharp correction till 9,950-9,800 levels on Nifty & 32,400-31,800 levels on Sensex in short term.
 
Stock Picks:
 
DHFL- BUY
CLOSE – Rs 610
TARGET – Rs 645/680
 
DHFL closed weekly in negative territory. It’s still consolidating in narrow range in this wave-IV correction. It’s outperforming in short term. It’s trading above 40 DMA. Its weekly momentum indicators are in BUY. One can BUY with stop loss of 590 for the target of 645/680 levels in short term.

 
M&M- BUY
CLOSE – Rs- 905
TARGET – Rs 925/940
 
M&M closed weekly in positive territory. It’s outperforming in short term. It has wave-V up pending as per daily chart. Its daily momentum indicators care BUY. Risk reward is favorable to BUY at current levels. One can BUY with a stop loss of Rs 880 for the target of Rs 925/940 levels in short-term.
 
POWERGRID- BUY
CLOSE – Rs-206
TARGET – Rs-212/215
 
POWER GRID closed the weekly in negative territory. Its look like this short term correction is good buying opportunity. Its weekly momentum indicators are in BUY. It managed to found support near 200 DMA. Risk reward is favorable to BUY at current levels. One can BUY with a stop loss of Rs 199 for the target of Rs 212/215 levels in short-term.

  
L&T- BUY
CLOSE – Rs- 1367
TARGET – Rs 1408/1430
 
L&T closed the weekly in positive territory. It’s trading above 40 DMA. Its daily momentum indicators are in BUY. Its outperforming in short term. Risk reward is favorable to BUY at current levels. One can BUY with a stop loss of Rs-1350 for the target of Rs 1408/1430 levels in short-term.
 
TATA CHEMICALS- BUY
CLOSE – Rs 738
TARGET – Rs 760/780
 
TATA CHEMICALS closed the weekly in negative territory. It’s consolidating in narrow range. 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-720 for the target of Rs 760/780 levels in short-term.

 
Devang Shah is the author of www.trendtechno.com (Trade with Trend) and an independent market analyst.
 
Disclaimer: The analyst may / may not have a position in the scrips mentioned above