Nifty outlook and stock ideas by Sameet Chavan: Buy Marico, Sell Bajaj Fin

Markets had a positive start last Monday and without wasting much of a time, Nifty continued with its streak of achieving new milestones. During the first couple of sessions, Nifty clocked back to back fresh highs beyond 17400; but failed to close beyond it on both the occasions. In the latter half of the week, we saw some hint of profit booking but mighty bulls came back strongly not only to defend key supports but also to lift the benchmark index beyond 17,350 comfortably to mark highest ever weekly close.  

The price action in key indices this week was extremely dull as we witnessed one of the thinnest weekly trading ranges for a long time now. Although Nifty looked a bit uncomfortable around 17,400 throughout this week, we did not see any major weakness overall. The moment it falls by nearly a percent, the buying tends to happen immediately. As of now, clearly bulls are having a firm grip on the market but as we have been mentioning since a week or so, they would find a bit difficult now going ahead. We reiterate our observations for becoming slightly cautious at current levels. They are, 1) we can see Nifty reaching the 200% ‘Fibonacci Retracement’ of the last year’s massive decline from Jan’20 high to March’20 low, 2) Time-wise, Nifty has entered 7th zone as per ‘Fibonacci Time Series’ on the monthly time frame chart. 

It may look a bit contradictory to adopt a cautious stance when market is making new highs almost every day. But these mentioned evidences have proved their efficacy in the past and hence cannot be overlooked. So let’s see how things shape up going ahead. As far as levels are concerned, 17,450 – 17,500 would now be seen as sturdy wall; whereas on the flipside, the first sign of weakness would come only after confirming a single day close below the support zone of 17,300 – 17,250. We advise traders to continue with a stock centric approach by following strict stop losses and booking timely profit is also highly recommended.

Stock recommendations:
 

NSE Scrip Code – MARICO

View   –   Bullish

Last Close   –   Rs. 575

Justification – Nifty FMCG index is having an excellent move since last 2 months; but this stock started its upward rally a couple of months before this i.e. in May itself. After a pause of nearly 4 months in the early part of current calendar year, the stock price suddenly took off once it surpassed the stiff hurdle around 430. Since then there has been no stopping for this counter as it even defied its previous image of being a slow mover. We recommend buying for a short term target of Rs.605. The stop loss can be placed at Rs.558.

NSE Scrip Code – IIFL WEALTH MANAGEMENT

View   –   Bullish

Last Close   –   Rs. 1674.75

Justification – We have not been actively tracking this counter but the way it moved in last couple of sessions in such a dull market, it certainly caught our attention. Price wise, the data is limited but still we can see it forming some interesting pattern at current juncture. On the daily time frame chart, we can see stock prices confirming a price and volume breakout from the multiple resistances zone to trade at fresh record highs. Traders are advised to buy for a short term target of Rs.1820. The stop loss can be placed at Rs.1590. 

NSE Scrip Code – BAJAJ FINANCE

View   –   Bearish

Last Close   –   Rs. 7430.65

Justification – This stock is in a different league altogether and has proved its worth over the last decade or so. All significant declines over the years have been bought into and this stock has not disappointed even once. Taking a glance at the recent performance, we can see stock prices taking off in the latter half of August after undergoing a small patch of consolidation. The higher degree trend undoubtedly remains strongly bullish but the way stock prices behaved over the past couple of weeks; indicating some exhaustion. Last week also we had recommended this; but stock did not have any major price action this week. Hence, we reiterate on selling the stock on a bounce around 7470 - 7500 for a target of Rs.7340 – 7300. The strict stop loss to be kept at Rs.7600.

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Discalimer: Sameet Chavan is Chief Analyst- Technical & Derivatives, Angel Broking. Views expressed are personal.