In our previous weekly commentary, we had advocated some caution considering the formation of ‘Hanging Man’ pattern on weekly chart. To activate this, the prices should have slipped below the low i.e. 15,450 in this case. But, since it reversed from 15500, the pattern was not confirmed. Also, we had shared our observation on the placement of the NIFTY MIDCAP 50
index around some crucial levels. All these negative developments have not been completely negated yet; but the kind of up move we witnessed in BANKNIFTY on Friday’s session, the bulls seem to have upper hand here. Hence, banks become a deciding factor going ahead.
A follow-up move in the coming sessions would definitely push the Nifty towards its much awaited milestone of 16,000 and may even extend towards 16,200 later. Hence, it would be interesting to see how things pan out in the banking space.
As far as supports are concerned, the immediate levels are placed at 15,700 – 15,670, and the base is to be seen at 15,450 now. Till the time the market defends these important supports, the short-term trend remains bullish. But, having said that, we would still reiterate that one should avoid being complacent and it’s better to continue with the strategy of ‘one step at a time’. Because although it’s difficult to time it, whenever any rally overstretches without giving any meaningful correction, market tends to surprise anytime. So to be on the safer side, try to avoid aggressive leveraged positions overnight.
NSE Scrip Code – CUMMINS IND
Justification – This stock has been consolidating with small correction in between since the beginning of April. Recently, the declining trend seems to have been arrested around the 750 mark which coincided with the ’89-EMA’ on the daily chart. The stock prices rebounded well from this important support zone and now with Friday’s smart up move, we can see a configuration of bullish ‘Cup and Handle’ on daily time frame. Since it’s backed by more than average daily volumes, we recommend going long for a short term target of Rs.906. The stop-loss can be placed at Rs 823.
Justification – All the life insurance companies are doing well since the last few months. In fact, they have been holding their ground firmly during the in-between corrective phases the broader market has been experiencing. Now, the stock prices seem to have cemented their position around 970 – 950 which is the earlier breakout point. During this week, its peer counters had a good move but SBI Life remained quiet. Now looking at Friday’s price action, we expect this stock to have do some catching-up to its peers. Thus, we recommend buying for a short term price target of Rs 1,058. The stop loss needs to be maintained at Rs 979.
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