Top trading ideas by Angel Broking: Bullish on MCX, bearish on Tata Steel

Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking.
 
Nifty Outlook:
 
In the week gone by, our markets had swings on both sides and in fact, benchmarks seemed to have decoupled as there were totally different directions seen from the global bourses in the latter half of the week. Eventually, this heavy sell off on Friday resulted into a decent cut from weekly highs to conclude proceedings below the 10200 mark (on weekly basis) for the first time after December 01, 2017.
 

As chartist, if we look at the daily chart, this corrective move is not at all surprising. We could clearly see some relief move retesting breakdown points and couple of key moving averages placed in the vicinity of 10420 – 10460 and then a resumption of downward trajectory in the latter half. The weekly time frame charts turned negative recently and are clearly proving their significance. Now, traders would keep a close eye on recent swing low of 10141 as a slide below this crucial junction would reinforce the selling pressure in the market. According to us, it’s a matter of time now and hence, we would stick to our recent negative stance on the market and continue to expect Nifty testing sub-10000 levels.

 
Traders are advised not to make any kind of bottom fishing soon and should trade with proper exit strategy. For the coming week, 10260 - 10350 would now been seen as strong hurdles. Any possible move towards these levels is likely to get sold into.
 
Stock recommendations:
 
1. NSE Scrip Code – MCX                                                                                           
 
View –    Bullish
 
Last Close –   Rs. 807.80
 
Justification – Since the early part of February, we have been quite vocal on the possible bottoming out formation around the 700 mark. We remained contradictory buyers from the level of 730 and this strategy eventually turned out to be quite fruitful for us. Recently, we witnessed a confirmation of the ‘Bullish Hammer’ pattern on weekly chart and now due to Thursday’s gigantic rally, the price structure confirmed its ‘Higher Top Higher Bottom’ formation on daily chart. Considering the volume activity in this price action, the stock is still not done with its upward move. Hence, we recommend buying for a target of Rs.855. Traders are advised to follow strict stop loss at Rs.782.

 
2.  NSE Scrip Code – Tata Steel
 
View –   Bearish
 
Last Close –   Rs. 600.20
 
Justification – This metal giant continues to be our preferred shorting candidate in last month and a half. Every meaningful bounce we used as a shorting opportunity in the recent past. Now, finally, our anticipation turned into a confirmation during the penultimate week; adding conviction to our cautious stance. We recommend shorting on some bounce back towards 608 – 612, which will make the risk reward ratio a bit favorable. One can look to go short for a target of Rs. 550 by following a strict stop loss of Rs.634.

 
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.