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Nifty outlook and stock recommendations by Sameet Chavan of Angel Broking

Last week, we had witnessed a 'Bullish Flag' breakout around 12,050 and since then markets never looked back.

Topics
Nifty Outlook | Markets | technical calls

Sameet Chavan  |  Mumbai 

Top-performing hedge fund turns cautious, says stocks have risen too fast
Traders are advised not to expect any meaningful correction in the near future and hence, do not venture into taking contradictory bets.

The year 2020 has not been great for mankind as we have had to make a lot of forceful changes in our lives. The pandemic weighed down heavily on health as well as on economies across the world. But it seems that slowly and steadily things are coming back to normal. In fact, a lot of positivity across the globe lifted at fresh record highs.

During the week gone by, the first three trading sessions were almost a replica of each other to register a new high of 12,769.75. This was followed by some consolidation ahead of the Muhurat trading session to conclude above the 12,700 mark by adding nearly four per cent on a weekly basis.

Last week, we had witnessed a ‘Bullish Flag’ breakout around 12,050 and since then never looked back. With its marathon rally in merely eight days, are very much in a commanding position. All’s well that ends well and hence, from hereon we can see a brighter picture till the next Samvat. Looking at the daily chart, we can observe a couple of encouraging developments on charts.

The ‘RSI-Smoothened’ is moving northwards after entering the bullish territory above 70 and adding to this, the ‘ADX (14)’ is becoming stronger as we can see its value rising well above the 25 mark. Generally, when we see these conditions together, it provides impetus to the rally. Hence, any dip towards 12,600 – 12,450 should be used as a buying opportunity.

On the upside, the next milestone of 13,000 is likely to be achieved very soon; in fact, we do not rule out the possibility of reaching 13,100 – 13,200 in the current week itself.

Traders are advised not to expect any meaningful correction in the near future and hence, do not venture into taking contradictory bets in such strong Bull Run. We are sounding extremely optimistic because almost all major sectors are contributing to this surge and hence, can be considered a robust one.

The broader market has also started to give some mesmerizing moves and mind you, this is just a beginning of the mega Bull Run. So fasten your seat belts and gear up to take off post Diwali as well.

Stock recommendations

NSE Scrip Code – LICHSGFIN

View – Bullish

Last Close – Rs 314.20

Justification – One of the traders’ favorite counter has not participated much in the overall rally in the last few months. However, recently we witnessed some encouraging signs as the stock prices finally managed to come out of its long consolidation phase. During the week, it confirmed a price volume breakout from the ‘Multiple Resistance’ zone along with reasonable volumes. Importantly, stock prices have managed to spend more than 15 consecutive trading sessions above the ‘200-day SMA’ for the first time after July 2019, which is extremely positive development for this counter. We recommend going long for a target of Rs 342 in the coming weeks. The stop loss can be placed at Rs 298.

NSE Scrip Code – ICICI LOMBARD

View – Bullish

Last Close – Rs 1,297.30

Justification – This stock has been the recent entrant to the F&O space; but after this, we did not see any action in the stock for a while now. It just rested around the ‘200-day SMA’ for nearly two months, because of lack of participation from the market participants. But on Friday, we finally witnessed a notable price action in the upward direction. This up move is backed by more than average daily volumes and hence, we expect the stock to be back in action in the coming days. Traders are advised to buy for a target of Rs 1,382 in the coming days. The stop loss can be placed at Rs 1,247.

NSE Scrip Code – DECCAN CEMENT

View – Bullish

Last Close – Rs 341.75

Justification – The entire ‘Cement’ space is on a roll since the last couple of months. All larger names have given a mesmerizing move in this period and now some of the smaller stocks are gaining traction. Last week, ‘Deccan Cement’ confirmed a good price-volume breakout on daily chart on Friday. The kind of extraordinary volume activity we have witnessed in the up move in recent months indicates some bigger moves to unfold and this probable rally seems to have just begun now. Hence, one can look to go long for a target of Rs 380 in the coming days. The stop loss can be placed at Rs 324.

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Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at The analyst may have positions in one or more stocks. Views are personal.

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First Published: Tue, November 17 2020. 08:23 IST
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