After an extended weekend post the Diwali festival, markets started off higher and clocked a fresh record high of 12,963 during the week. Since there was no major follow-up buying seen in major heavyweight constituents, Nifty was unable to show the 13,000-mark on the screen. In fact, some profit-booking was witnessed in the last couple of sessions to eventually conclude the week with nominal gains.
In the previous couple of weeks, markets have already taken a giant leap and mostly all the major positive factors are already priced in; markets had no fresh trigger to continue the similar kind of pace. We still do not rule out the possibility of immediate levels of 13,100 - 13,200, but the rally may not be that smooth now. The overall trend still remains strongly bullish and we continue with our ‘Buy on declines’ strategy but in between, we are likely to see some profit-taking. For the forthcoming week, Friday’s low of 12,730 will now be seen as key support. A move below this will extend the corrective move towards 12,600 - 12,450 levels; whereas on the higher side, 12,963 is the level to watch out for.
In our intra-week commentary, we had mentioned how the banking index is showing some signs of being overbought and very much on expected lines, we witnessed nearly 1,200 points correction in the last couple of days. Fortunately, due to the late surge in banking conglomerates, Bank Nifty closed very much in safer territory above 29,200. But, the real action continued in the broader markets and hence, we can still focus on the same. Traders are advised not to trade aggressively now and should continue with a stock centric approach.
NSE Scrip Code – DHAMPUR SUGAR
View – Bullish
Last Close – Rs. 150.85
Justification – ‘Sugar’ being the cyclical commodity, is undergoing some consolidation phase since last couple of months. Before this, it had a good multi-month rally on the back of lot of positive news flow for this sector. On Friday, we witnessed the first sign of strength as stock prices witnessed a good buying momentum along with more than average daily volumes.
It would be too early to comment on this, but the stock seems to have spent some time at 200-day SMA and is now ready to resume its uptrend. We recommend going long for a target of Rs.163 in coming weeks. The stop loss can be placed at Rs.143.40.
NSE Scrip Code – UBL
View – Bullish
Last Close – Rs. 1,094.25
Justification – Since the economy is opening up gradually and things are coming back to normal to some extent, a lot of such themes played out well in last three weeks. This liquor stock had a spectacular recovery in the first half of the current month and now after a brief pause, it has regained strong buying momentum. The daily chart depicts a good price-volume breakout and looking at the rising slope of ‘RSI-Smoothened’ oscillator, we expect the stock to do well in the near term. Traders are advised to buy for a target of Rs.1,382 in coming days. The stop loss can be placed at Rs.1,247.
NSE Scrip Code – ASHOK LEYLAND
View – Bearish
Last Close – Rs. 90.80
Justification – ‘Auto’ stocks had a phenomenal run over the past few weeks, especially the previous laggard counters, who are catching up with some outperformers. ‘Ashok Leyland’ clearly belongs to this category and it has finally brought back some sigh of relief for many investors. Since the recent rally was extremely steep in nature, prices on short term charts entered an overbought territory and thus, we witnessed a good profit booking on Friday. Due to this, we can see a ‘Shooting Star’ pattern on daily chart, indicating extension of profit booking move. Hence, one can look to go short on a minor bounce up to 93 – 94 for a target of Rs.86 in coming days. The stop loss can be placed at Rs.96.70.
Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.