Market consolidates further, still better to be with the trend
Trading for the week kick started on a positive note, slightly above 11,700, very much in-line with other Asian peers. However, it looked like a fragile gap up opening and hence, markets started coming off immediately from opening trades. In fact, the selling aggravated as the day progressed and hence, we not only erased early morning gains but also went on to sneak well below key support levels.
During the remaining part of the week, index consolidated within the range of Monday’s session with lot of stock-specific moves. On Friday, we saw good traction throughout the day and hence, Nifty eventually managed to close well above the 11,600 mark.
Recently, markets had run up quite sharply and generally after such a relentless move, markets need to undergo either ‘time-wise’ or ‘price-wise’ correction. What we are experiencing is a part of that time-wise correction. Such development is considered a healthy move if markets has to unfold further legs in the upward direction.
As far as levels are concerned, we are trapped in a range of 11,761 – 11,549 and a decisive breakout on either side would bring back some momentum in the market. In our sense, even if we slide below 11,549, the trend does not change and hence, we would rather interpret it as a good buying opportunity.
In any kind of consolidation, it is hard to give time projection; but according to us, it’s a matter of time, we would see Nifty going beyond 11,761 and enter an uncharted territory. Whether this happens before the election verdict or not, the time will tell us. Till then traders are advised not to have a contrarian approach and should rather look to identify potential candidates in order to fetch higher returns.
NSE Code: HDFC
Last Close: Rs 2,024.95
Justification – This stock has been one of the strong pillars in Indian equity markets and it has always participated in the gigantic growth our markets have seen over the past three decades. This marquee name never disappointed investors and has always been the reason of investors’ wealth creation. During the penultimate week, the stock price managed to break out from nine months’ congestion zone around the Rs 2,000-mark. After a small up move, the stock price has retraced back to its breakout points and is looking at the overall ‘Bullish Cup and Handle’ pattern. We expect buying to emerge in forthcoming sessions. Considering all these evidences, we recommend buying at current levels for a target of Rs 2,095 and the stop loss should be fixed at Rs 1,987.
NSE Code – Jai Corp
Last Close: Rs 127.70
Justification – After vacillating in a broad range of Rs 90 to Rs 120 for the last five months, the stock prices have finally broken above the higher range of consolidation confirming a ‘Rectangular Channel’ bullish breakout. Moreover, on the weekly chart, we are witnessing a trend line breakout formed by joining two major tops. The above said breakouts are supported with rising volumes and strong bullish candle. Looking at the multiple pattern breakouts, we sense a strong upside in the near term. Thus, we recommend buying at current levels for a target of Rs 146 and the stop loss should be fixed at Rs 118.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.