Consolidation continues, but good to see banking taking a charge
In the week gone by, the price action can be precisely divided into two parts. First being the tentative one on the back of some worries in HANG SENG (Hong Kong) and the latter half where markets looked to stabilise and then recovered completely. All in all, the truncated week eventually concluded on a muted note. But since the technical analysis gives more weightage to the latest price development, the recovery looks encouraging and we are standing at a crucial junction now.
Technically speaking, nothing much has changed from the previous week. The only additional observation would be the intra-week decline towards the psychological level of 11,800, which coincided with the ’89-EMA’ on hourly chart. So the index is on the recovery path now and looking at the sheer outperformance from the banking space this week, we expect the Nifty to head towards 11,950 – 12,034 soon. In fact, if the similar traction continues in marquee banking names, we will not be surprised to see index clocking record highs soon. Thus, the bias remains positive and one should stick to a ‘Buy on decline’ strategy.
As far as support levels are concerned, this week’s low of 11,802 ,followed by 11,750 is likely to act as a sheet anchor for the forthcoming week. Some of the other sectoral indices that attracted traders’ attention towards the fag end were the Pharma, Metal and Auto. Do watch out on these baskets which are likely to provide better trading opportunities.
NSE Code – PERSISTENT
View – Bullish
Last Close – Rs 652.65
Justification – This stock witnessed a time-wise correction for nearly six months. During the week gone by, we finally saw emergence of strong buying interest which resulted into a breakout from this consolidation phase. On the daily chart, stock prices have closed above 640 levels which previously acted as stiff resistance for five times in the last six months. The said breakout resembles an ‘Inverse Head N Shoulder’ breakout which is supported by the positive placement of key averages and momentum oscillators. Thus, we recommend buying this stock at current levels for a target of Rs.753 over the next 14 sessions. The stop loss should be fixed at Rs.596.
NSE Code – LUPIN
View – Bullish
Last Close – Rs 742.25
Justification – After a long underperformance, the Pharma space is now on the path of revival. On the daily chart, after a recent sharp bounce from the levels of 646 to the recent high of 787, the prices have witnessed a price-wise correction. The said correction is forming a base around 50 per cent retracement of the above rally and price structure suggests a resumption of up move very soon. The lead indicator RSI after taking support at 40 levels has turned northward signaling a fresh buy with its smoothened moving average supporting the preemptive buy call. In addition, prices are trading well above 20SMA and 50SMA which indicates short to medium term bullishness. Hence, we recommend buying this stock at current levels for a target of Rs.798 over the next few weeks. The stop loss should be fixed at Rs.710.
Disclaimer: Views expressed are the author's own. He may have positions in one or all of the above mentioned stocks.