Nifty clocks record highs, enters uncharted territory
In the penultimate week of November, we saw some indecision in the market around 12,000 which eventually resulted into a decline towards 11,900. However, on Monday, the week started on an optimistic note and marked a fantastic intraday rally to reclaim 12,000 with some authority. Clearly, the opening day had set the tone for the rest of the week. In-line with this, the rally extended as the week progressed and finally on Thursday, the Nifty surpassed its previous record highs to mark a new number of 12,158.80. However, on Friday, the Asian bourses once again looked a bit nervous and as a rub-off effect of the same, we witnessed some profit-booking to conclude the week a tad above the 12,050-mark.
We have been quite vocal since last few weeks that it’s a matter of time we would see Nifty clocking fresh record highs and finally it’s a reality now. In fact, despite penultimate week’s tail end decline, we remained firm and advised using this as a buying opportunity. The strategy played out well and in spite of slightly weak day on Friday, we continue with our positive stance on the market. The benchmark index has registered a highest ever weekly as well as Monthly close and the way charts are shaped up, we expect continuation of the northward trajectory.
Traders are advised not to remain sceptical as the recent rally has been vertical in nature and looks a bit overbought. In such a strong trend, market generally tends to give gravity defying moves and hence, one should refrain from taking contradictory bets with a positional view. Rather, use declines to go long and keep focusing on potential stocks which are likely to participate in the probable rally.
NSE Code – UNION BANK
View – Bullish
Last Close – Rs. 63.05
Justification – After a prolonged underperformance, PSU Banks have revived from their lows in the last few weeks. It would be too early to expect this as an absolute bottom, but certainly looks like they are all set for a decent move in the near term at least. The daily chart exhibits a bullish reversal pattern breakout known as ‘Inverse Head and Shoulder’. The said breakout is supported with a good increase in volume and bullish candle stick pattern. In addition, momentum oscillators on the weekly chart have just come out of its oversold zone suggesting further potential up move in the near term. Thus, we recommend buying this stock at current levels for a target of Rs.75 over the next days. The stop loss should be fixed at Rs.56.
NSE Code – LUPIN
View – Bullish
Last Close – Rs. 800.65
Justification – Since last three weeks, we have been consistently recommending this stock and in the process, it has already rallied from the levels of 743. Despite this run-up, we still believe that the stock is not done with its short-term move. After a long underperformance, we are seeing signs of revival in ‘Pharma’ space and this being the marquee name within this, precisely replicates the chart structure of ‘Pharma’ index. The weekly chart depicts a Higher Top Higher Bottom formation for the first time in many months and importantly, the rally is accompanied by considerably higher volumes. Considering all this, we expect an extension of the rally and hence, traders are advised going long for a target of Rs.838 – 850 over the next few days. The stop loss should be fixed at Rs.781.
Disclaimer: Views expressed are the author's own. He may have positions in one or all of the above mentioned stocks.