Short-term outlook remains negative, says Sharekhan's Devang Shah

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

NIFTY

CLOSE- 7437.80 (15.01.16)
 

Market closed second consecutive weekly in negative territory. It has achieved short term targets near recent lows as expected last week. It made a low of 7425.80 levels on nifty. All the other indices such as midcap, small cap & Bankex etc also closed weekly in negative territory. It failed to sustain at higher levels. It made a high of 7604.80 levels in Wave-II of C Pull back rally during week & started to fall further from these levels. It looks like extension in wave-C of Z as per chart attached. One can expect market to correct further sharply for lower levels targets in short to medium term.
 

Short term out look for the market remains negative till nifty trades below 7634 levels & expecting targets in the range of 7250-7220 levels in short term, sustain below it will lead to further sharp fall till 7100-6950 levels in medium term.

BANK NIFTY is also showing sign of extension on lower side. It closed 2nd consecutive week in negative territory. One can expect bank nifty to touch lower end of channel for the targets in the range of 14750-14400 levels in short to medium term.

Broader market ( Midcap & Small cap index) which were out performing till last week are started to show selling pressure in this week. There is still some more pain left in this indices in this wave-2 correction.
 

We are approaching towards final levels targets in wave-C of Z in this fast & furious panic correction kind of stage of the market. I have seen in many stocks, commodities & indices that Final climax stage is sometimes becoming deeper then expected. Let see how many targets we can achieve before forming medium term bottom. But one thing is still not changed that we are in long term bull market. This correction is an opportunity to BUY for Long term investment perspectives till LONG term trend change.
 

Momentum indicators daily KST & daily MACD both are in sell supporting short term trend. Close above short term reversal levels will lead to sharp rally till 7,980 levels in short term one should be stock specific & follow the trend with stop loss levels till it reverses.

Stock Picks:

MARUTI- SELL

CLOSE: Rs 4,260

TARGET: Rs 4,010/3910
STOP LOSS: Rs 4,338
 

Maruti closed weekly in positive territory. It still has wave-V down pending on daily chart. Its momentum indicators are in SELL. Risk reward is favourable to SELL at current levels. 
 

HDFC: SELL

CLOSE: Rs 1,147

TARGET; Rs 1,093/1,060
STOP LOSS: Rs 1,176
 

HDFC closed weekly in positive territory. Its momentum indicators are in SELL. 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.