Some breather before heading towards record highs
It was more of a week of consolidation for our markets after recent relentless run from lower levels. We started the trading for the week on a positive note and then continued our march higher towards the next psychological junction of 11,500. Since, the overall optimism was so high, the Nifty did manage to test and even surpass this level during the week. But during the latter half of the week, the index saw subdued moves with some hint of profit booking on Friday to conclude tad below 11,500 by adding negligible gains to the previous week’s close.
This week’s lethargic move was no surprise to us as we had clearly opined about a possible consolidation after the Nifty entering the important trading range of 11,500 – 11,600. In fact, we saw some tiredness on the last day of the week. The Nifty breached previous day’s low for the first time in the last 9 days; whereas the Bank Nifty did similar on the 13th day. More than weakness, we would rather construe this as a pullback or profit booking move, which was very much overdue after giving such a steep rally in a short span.
As far as levels are concerned, 11,520, followed by 11,600, remains to be immediate hurdles and on the flipside, support is visible in the vicinity of 11,420 – 11,383 for the forthcoming week. In our sense, this breather was necessary before the Nifty moving towards its record highs. Thus, we still advise traders not to have a contrarian approach on the market and should rather capitalize on such declines. However, having said that, one needs to be very fussy now when it comes to the stock selection; because not all stocks are likely to perform well in such kind of consolidation.
View – Bullish
Last Close – Rs 1,430.40
Justification – This stock has been consolidating in a range since the last few months. In the initial part of the week gone by, the stock prices finally broke out from this congestion zone along with reasonably higher volumes. Further, if we look at it from a broader perspective, it appears that the stock has completed its price wise as well as time wise correction of the larger degree uptrend. The ‘RSI-Smoothened’ on the daily chart has entered a ‘Bull Territory’ after crossing the 70-mark. Considering all these evidences, we recommend buying at current levels for a target of Rs 1.565 and the stop loss should be fixed at Rs 1,384.
View – Bullish
Last Close – Rs 550.15
Justification – In the last couple of weeks, the midcap and small-cap baskets are on a roll. In fact, unlike previous months, so many stocks from the ‘cash’ segments started raising their heads higher and have given some stellar moves. It appears that they are finally out of the slumber and are gearing up for strong moves. This stock is clearly one of them. After a long consolidation of nearly Five months, the stock has confirmed a breakout from multiple technical indicators. Looking at the increase in volume activity, we expect the stock to climb inthe next few weeks. Thus, we recommend buying at current levels for a target of Rs.615 and the stop loss should be fixed at Rs 508.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.