Friday’s session was almost a replica of the previous day; however, the only difference was, we fell from higher levels in the latter half on Thursday and on Friday, we recovered after correcting in the first half. Overall, the bias remained neutral as we are experiencing some indecision with index per se. However, the stock-specific action still continues in the market as we saw good participation from the broader end of the spectrum. Eventually, the truncated week post Diwali festival concluded with handsome gains over a couple of per cent.
Nifty was struggling to surpass the sturdy wall of 11,650 – 11,700. On the opening day of the week gone by, we saw index surpassing this barrier with an ease and from there, we continued our March towards 11,900. Now, with Sensex already posting a fresh high, the Nifty is not going to shy away for a long time. Soon, we would be witnessing Nifty traversing the 12,000-mark to go beyond its record high of 12,103.05. Before this some brakes seems to have applied on the recent momentum. The last two day’s narrow range body formation indicates indecision or a profit-booking and by no means, we construe this as a sign of caution. In our sense, the northward trajectory is likely to continue and soon we are likely to be heading higher to reach new milestones.
We are sounding extremely sanguine, because in the recent move from 11,400, the overall market breadth has improved drastically and it’s always a sign of a robust rally. Lot of beaten down sectors / counters are finally out of their slumber and are showing some encouraging signs. Clearly the AUTO and PHARMA belongs to this category and the METAL space, which was on a roll this week. Do watch out for these spaces as they are not done yet, rather this is just a beginning. Last but certainly not least, the banking index, which has been slightly underperforming of late, is on the cusp of giving a breakout from crucial resistance zone. If it confirms this, no brainer, Nifty is heading towards new high.
For the coming week, 11,843, 11,776, and 11,714 would be seen as immediate support levels. In case of a decline towards these crucial junctions, traders are advised to use it as an opportunity to go long with a positional perspective.
NSE Code – TATASTEEL
View – Bullish
Last Close – Rs. 399.50
Justification – The entire Metal space has undergone a severe pain over the last many months; courtesy unfavorable developments on the global front (especially in China). But now, it seems as if the most of uncertainty, global tensions are subsiding one after another and that’s clearly getting reflected in recent price action of these China-sensitive names. ‘Tata Steel’ has been consolidating of late around its multi-year supports and on Tuesday, we saw first sign of revival. The stock prices confirmed a breakout above recent swing high which was followed by some mild profit-booking. However, on Friday, strong buying emerged at breakout points which resulted into a spectacular single day gains of nearly 5 per cent. With this, the stock has resumed its northward trajectory and looking at the volume activity, we expect it to extend further in the coming days. Thus, we recommend buying this stock at current levels for a target of Rs 425-440 over the next 14 sessions. The stop loss should be fixed at Rs 374.
NSE Code – Alembic Pharma
View – Bullish
Last Close – Rs. 570.70
Justification – After a long underperformance, similar to some other beaten down sectors, the Pharma space is also now on the path of some revival. On the daily chart, stock prices have broken above its stiff resistance of Rs 560 which previously acted as a supply zone seven times in the last eight months. The breakout from the same has resulted into a bullish reversal pattern breakout known as ‘Inverse Head and Shoulder’. The said breakout is supported with a good increase in volume and now after a period of consolidation, the price structure indicates a trending up move in the near term. Hence, we recommend buying this stock at current levels for a target of Rs 648 over the next few weeks. The stop loss should be fixed at Rs 527.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.