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Nifty set to scale new lifetime high soon: Sameet Chavan of Angel Broking

For Nifty, 12,430.50 is the first level to watch, and post that, the theoretical target of the 'Flag' pattern is around 12,700

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Markets | Market technicals | Venky’s India

Sameet Chavan  |  Mumbai 

BSE

Nifty Outlook

Last week was one of the remarkable weeks of trade for our markets; rather, we can say for the entire world. As we stepped into an eventful week on Monday, things were much different. We had a lot of uncertainty around us, which had spooked and the indices were battling around the key supports, which at one time looked like getting breached. But fortunately, the buying emerged right from the first day and the moment counting started for the race of becoming the next US President, started reacting pleasantly. In fact, they just took off in the last couple of days to clock whopping gains -- over 5 per cent for the Nifty and more than 12 per cent for the Bank Nifty, on a weekly basis.

Honestly speaking, it was one of the rarest bigger events when had a smooth unidirectional move throughout the week and fortunately, it’s in the northward direction, which is gratifying for market participants across the globe. Yes, we should not ignore the fact that the actual verdict is yet to come, so you never know how the reaction would be this week. But, it seems that the markets have completely shrugged off/discounted the complexity of this event and have just seen the bright futuristic picture. Despite some challenging times, we remained hopeful at the start of last week as long as the key support of 11,600 – 11,500 is not violated. The markets not only defended it but are very much at a comfortable position now with new record highs in sight. Technically, we can see a ‘Bullish Flag’ breakout happening along with a ‘Breakaway Gap’ on a daily chart. It is considered a strong development and hence, we are likely to move beyond previous highs soon. So, 12,430.50 is the first level to watch and post then the theoretical target of the ‘Flag’ pattern is around 12,700. Further levels can be projected as we move forward.

On the flip side, Thursday’s gap area of 12,027.20 – 11,929.65 should act as a strong support. This rally can be considered a healthy one because almost all sectors have contributed to it and financial space has dominated it along with the late participation from the broader market. The much-awaited breakout in the Midcap index has already been confirmed, which generally happens when the market feels that the uncertainty is behind us and we are likely to witness some strong rally in the near future. Going by this logic, it adds more conviction and hence, we expect some encouraging moves to come in the broader market. 

Stock recommendations:

NSE Scrip Code – VENKY’S

View – Bullish

Last Close – Rs. 1,588.65

Justification – The midcap universe is back in flavor and Venky's -- one of the high beta stocks -- has confirmed a decisive breakout from the ‘Multiple Points Trend Line’ around 1,570 on a closing basis. If we take a glance at the higher time frame, we can see a ‘Flag’ pattern on weekly chart. More importantly, stock prices have traversed ’89-EMA’ convincingly on weekly chart for the first time after November 2018. Hence, looking at rising volumes in this upward move, we expect a decent rally in days to come. We recommend going long for a target of Rs.1,730 in coming weeks. The stop loss can be placed at Rs.1,524.

NSE Scrip Code – DECCAN CEMENT

View – Bullish

Last Close – Rs. 341.75

Justification – The entire ‘Cement’ space is on a roll since 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. ‘Deccan Cement’ has now 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 on a dip around 335 for a target of Rs.380 in coming days. The stop loss can be placed at Rs.324.


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

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First Published: Mon, November 09 2020. 07:58 IST
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