Floodgate finally opens for 12,400 – 12,500
Towards the fag end of the previous week, the tensions between the US and Iran arose from nowhere and the small trailer of it was seen on Friday (January 03) itself. However, the real repercussion of this development was seen on the first trading day of the week gone by. We had a massive cut of nearly two percent to test sub-12,000 levels. This continued till Wednesday’s opening point as things started to look extremely scary. Fortunately, things cooled off with respect to this as no follow up action was seen from both countries thereafter. This resulted into a V-shaped recovery in our market after an overreaction seen in the first half. Eventually, Nifty managed to close in the positive territory and is now knocking on the doors for new milestones.
The action-packed week with wild swings finally ended in the favour of mighty bulls and going by the famous phrase ‘All’s well that ends well’, the wider smile is back on the faces of market participants. This Friday, we continued our northward trajectory and with the help of complete gush, managed to clock fresh record highs beyond 12,300. However, due to decent profit booking in the latter half, Nifty came off considerably from highs on Friday, but not to worry, since the overall structure still looks sturdy. Once we manage to reclaim 12,300 again, we will not be surprised to see the index heading towards next milestones of 12,400 – 12,500 in the forthcoming week itself. On the lower side, 12,200 followed by 12,140 would be seen as immediate supports.
Traders are advised not to be adventurous by taking positions against the major direction. We have already seen the consequences of shorting this market in the week gone by. However, the real highlight was the sheer outperformance of the mid and small cap baskets. We have been quite vocal on this space of late and the way it’s shaped up, we expect stellar moves from the broader end of the spectrum. Do watch out for potential candidates from this universe along with the ‘Auto’ counters who are poised for good moves in the near future.
FINOLEX INDUSTRIES (FINPIPE)
View – Bullish
Last Close – Rs. 574.15
Justification – After trading in a broad range of 530-560 for the last month, the stock has broken above the higher range, confirming a bullish range breakout. The last two sessions’ up-move is supported with a bullish gap and with increasing volume. In addition, the lead indicator RSI has hastened into the positive zone from the oversold zone suggesting a strong positive momentum. In the last few weeks, stocks from the midcap segments have been outperforming and going with all the above rationale, this stock too seems to be gearing up for a strong up move in the near term. Thus, we recommend buying this stock on a minor decline for a target of Rs.640 over the next days. The stop loss should be fixed at Rs.536.
INDOCO REMEDIES (INDOCO)
View – Bullish
Last Close – Rs. 195.50
Justification – After a long time, midcap stocks have finally joined the bull’s party and showed outperformance during the week gone by. This midcap stock, after gyrating in a broad range of 135-175 for the last five months, finally broke the range last week on the higher side, confirming a ‘Rectangular Channel’ breakout. In addition, prices on the daily chart have also closed above SUPER TREND indicator which acted as stiff resistance four times in the last few months. Moreover, we are also witnessing a fresh bullish crossover with 50EMA crossing 89-EMA from below, supporting the buy call. Looking at the favorable risk-reward ratio, traders are advised to go long for the target of Rs. 211 over the next few days. The stop-loss should be fixed at Rs.186.
Disclaimer: Views expressed are the author's own. He may have positions in one or more stocks.