Broader market is strongly outperforming: Devang Shah

NIFTY
CLOSE- 8666.90 (19.08.2016)

Market further consolidated in narrow range for 5th consecutive week. It’s consolidating in narrow range of 8500-8700 levels on nifty. One can expect to break it soon & eventually expect strong directional trend with momentum in the market. It looks like wave-IV Time wise consolidation as per daily chart. One should expect wave-V upwards rally after breaking of this range upside. One should use such kind of decline or consolidation to BUY stock specific for higher levels targets in short to medium term.

Bank nifty has already broken out of short term consolidation on upside as expected last week. One should expect it to trend towards life time higher levels for the targets in the range of 20,800-21000 levels in short to medium term as per chart attached.
 

Short term out look for the market still remains positive till nifty trades above 8476
 Levels & expecting targets in the range of 8800-8850 levels in short term. Medium term out look for the market remains positive till nifty trades above 7927 levels expecting targets of 9120-9400 levels on nifty in medium term.

Broader market is strongly outperforming at current level of market. BSE Small cap & NSE Midcap are nearer to strong break levels. It’s near 2008 peak levels. Break of this levels on upside will lead to further sharp rally in mid cap & small cap stocks in coming trading session. One can expect midcap & small cap stocks to outperform in this rally ahead. One should buy quality midcap stocks in portfolio from investment perspectives to earn good return in this rally ahead. BSE MIDCAP indices already broken out & surpass 2008 peak levels. We are going to see real strong bull market rally in midcap & small cap stocks across the board after this break out. One should closely watch out this breakout in coming trading session.

Momentum indicators Daily KST came in to BUT today but Daily MACD are still sell may create volatility in short term ahead of expiry next week. 8500-8600/ 8700-8800 levels looks strong supports & resistance levels respectively based on derivative option open interest data for this month series at current levels of market. One should be stock specific & follow trend till it reverses in short term.

Stock Picks:

BEL-BUY
Target: Rs 1320/1400
Stop Loss: Rs 1180

BEL closed weekly in negative territory. Its consolidating in narrow range. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 1180 for the target of Rs 1320/1400 levels in short term.

Punjab National Bank-BUY
Target: Rs 137/146
Stop Loss: Rs 121

PNB closed weekly in Positive territory. It closed above 20 DMA. Its daily momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 121 for the targets of Rs 137/146 levels in short term.

BHARAT FORGE- BUY
Target: Rs 913/968
Stop Loss: Rs 780

BHARAT FORGE closed weekly in positive territory. Its daily momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs 780 for the target of Rs 913/968 levels in short term.

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.