All eyes on geopolitical concerns
Since the last week of March, our markets have somehow managed to stabilize from recent mayhem and then gave some decent recovery thereafter. Until Tuesday’s session, Nifty was struggling to surpass the 9400 mark. But due to strong buying momentum in last couple of sessions, the Nifty finally broke out from this sturdy wall and went on to close convincingly above 9,800 mark.
The March month was one of the worst months for our markets in history ever, but fortunately, this was followed by a stupendous April month during which we managed recoup 50% of the damage done in March. Mainly it was a broad based rally and some of the laggard spaces like Financials and Auto contributed heavily, which provided credence to the move. Looking at the overall set up by taking Thursday’s close, the Nifty is very much poised for an extended move towards 10200-10400, which would be seen as a strong hurdle for the market. Traders should start lightening up positions in the mentioned zone and then wait for further signals. But before this, there is an important development happened on a global front over the past couple of days, which cannot be overlooked.
US President Donald Trump has threatened China to impose new tariffs, which could lead to a resumption of trade war. Hence, market participants across the globe looked intimidated, resulting into a sharp decline across the globe. The SGX Nifty too reacted negatively to this development and is showing a massive cut. On Monday, we need to see how our market actually reacts to it and if they open in line with SGX Nifty, 9,300 and 9,100 would be seen as crucial supports. If we fail to hold them, this would apply brakes on recent optimism and in this case, we will have to revisit our view. However, if our market doesn’t react to the tune of SGX Nifty and shows some buying interest at lower levels, the above mentioned bull case scenario remains valid. So, all eyes would be on this global development, which would dictate the immediate path of action for our markets.
View – Bullish
Last Close – Rs. 79.90
This one of the ‘Maharatna’ companies of India has been underperforming for several years now. In fact, in the recent meltdown, the stock prices plunged to 2004 lows. Fortunately, after marking a low around 46, we witnessed a decent recovery in this stock and in the process; it has managed to confirm a breakout from the ‘Symmetrical Triangle’ pattern. Importantly, the recent rally in stock prices is backed by considerably higher volumes. Thus, we recommend going long on a decline towards Rs.75 for a positional target of Rs.92 in coming days. The stop loss can be placed at Rs.68.
View – Bullish
Last Close – Rs. 514.30
This stock has been consolidating above the 50 and 89EMA for the last few session and has now broken above this consolidation on the upside confirming a continuation pattern known as ‘Pennant’. The said breakout is supported with a good increase in volume. In addition, prices have now closed above the higher end of Bollinger Band which indicates strong momentum up move post the recent consolidation. In addition, the momentum oscillator i.e. RSI is pointing northward after the recent dip supporting the buy call. Looking at all the above evidence we sense a strong upside in the counter. One can look to buy for a target of Rs.560 in coming weeks. The stop loss can be placed at Rs.491.
Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking Ltd. Views are personal.