Stock picks by Sameet Chavan: Buy ITC, sell Dr Lal PathLabs

Dr Lal PathLabs' stock seems to have lost its sheen now as we are seeing consistent corrective moves over the past few weeks

Nifty Outlook

Yet another Monday kick-started with a gap and this time it surprised pleasantly in the upward direction. Subsequently, the benchmark index consolidated within a range throughout the day by maintaining its positive posture. Amongst a good stock specific action, Nifty managed to reclaim the 14,950 mark on the first day itself. Everything looked rosy and things were very much in place for a breakout from the recent congestion phase. However, all of a sudden, the global markets looked a bit shaky and started correcting sharply from their recent highs. This had a rub off effect on our markets which dragged the index lower to conclude marginally inside the sub-14,700 territory.

The weakness across the globe became the real spoilsport and did not let our markets go beyond the recent consolidation range. But, we must also accept the fact that we have outperformed our global peers significantly as we did not fall to the tune of the global indices. At the end, we still remain directionless and completely clueless which way we are heading now. It would be wise to mention few key levels and keep a close track of it in the first half of the forthcoming week. As far as supports are concerned, 14,540, followed by 14,400, are to be seen as key levels. A sustainable move below the lower range would certainly dent the possibility of some positivity in the short term. On the flipside, 14,750 – 14,830 are to be seen as key hurdles. If we have to regain strength then Nifty needs to go beyond 14,830 first.

Similar to the previous week, we witnessed ample thematic moves playing out one after another. Only on Friday, there was no clear winner and, in fact, the broader market saw some decent correction, which is not an encouraging sign. We advise traders to keep a tab of all the above mentioned levels and meanwhile continue with a stock centric approach. Further, it is

advisable to stay light and avoid aggressive bets till the time global volatility subsides.

Stock recommendations:

NSE Scrip Code – ITC

View – Bullish

Last Close – Rs 212.25

Justification – This has been one of the most loved stocks by the investors as well as traders fraternity. But it has failed miserably to live up to its expectations time after time. Let’s see what the short-term trend looks like.

The overall price action in the period of November’20 to early part of February this year has been excellent; but since then, we have been witnessing a complete lull in the stock. After experiencing some correction from recent highs, the stock went into a consolidation mode and spent some time around its cluster of key moving averages. On Friday, we unexpectedly witnessed a surge in prices along with sizable volumes. Thus with the hope it will continue its momentum, we recommend going long on a minor dip towards 209 – 207 for a target of Rs.222 in coming days. The strict stop loss can be placed at Rs.202.

NSE Scrip Code – LALPATHLAB

View – Bearish

Last Close – Rs 2,719.45

Justification – This pathology stock seem to have lost its sheen now as we are seeing consistent corrective moves over the past few weeks. Taking a glance at the daily chart, we can see prices sliding below its key support of 2,800 on a closing basis. Price wise, it confirmed a ‘Lower Top Lower Bottom’ on daily chart which is a sign of short-term weakness. Since it has already come off quite a lot from recent highs and is approaching its strong support zone, we recommend selling for a conservative downside move. Momentum traders can look to go short for a target of Rs.2600 in coming days. The strict stop loss can be placed at Rs 2,792.

Disclaimer: Sameet Chavan is Chief Analyst - Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.