Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:
This was clearly an eventful and action packed week for our markets. Finally, we saw index coming out of the recent congestion in the latter half. Unfortunately for many traders, it happened on the down side; courtesy to global uncertainty. However, Friday’s session turned out to be a nightmare for the bears and especially for those who created fresh shorts during Thursday’s stock specific mayhem. Undoubtedly, many traders left clueless with the kind of bounce back move we witnessed in the broader market. The Nifty eventually went on to reclaim the 10700 mark on a closing basis.
Now, the question is, are we done with the correction or this is just a relief rally? Honestly speaking, it is very difficult to make a comment at this juncture as the index closed precisely in the corridor of uncertainty. As a pessimist, we would interpret this as a bounce back towards the breakdown point which coincides with the daily ’20 EMA’ as well as the ‘Rising Trendline’ resistance. On the other hand, the way some of the individual stocks recovered during the session is a sign of strength. There are times when market confuses us and plays with our emotions; this is clearly one of those instances. Hence, to make it a bit easier, we would let market give further indications. Going ahead, 10,740 – 10,760 would be seen as a crucial hurdle. If index stays above it for a while then we may see extension of this move towards 10,800 – 10,830 and a failure of this would result into a decline to once again go back towards 10,600 – 10,550 levels.
Traders are advised to keep tracking these levels and should avoid aggressive bets till the time the picture remains unclear. However, having said that one can continue focusing on individual stocks that are offering better trading opportunities as compared to the index. One notable observation, the ‘Nifty Infra’ has shown tremendous come back and the chart structure indicate a possibility of recent correction getting over. Hence, one can look to identify and accumulate marquee names within this thematic index.
View – Bullish
Last Close – Rs 1294.65
Justification – We have been quite upbeat on the ‘cement’ space since last couple of weeks. Initially, it sounded a contradictory approach; but the way some of the cement stocks bounced back this week, the strategy seems to have played out well for us. ‘ACC’ continue to remain amongst the preferred choices, even after a four percent move. The weekly and daily charts look quite promising and hence, the stock is likely to extend this relief rally in coming days. We increase our near term target for this stock towards Rs 1420. Traders can keep their stop losses at
2. KAVERI SEED COMPANY
View – Bullish
Last Close – Rs 557.55
Justification – Recently, the stock prices confirmed a breakout from the bullish ‘Cup and Handle’ pattern around the stiff resistance of 540. Since, it was accompanied by sizable volumes; we did see some follow up buying in this counter to clock nearly 10% gains post the breakout in a span of 4 – 5 days. However, the stock faced a strong profit taking at higher levels and as a result; the stock tumbled sharply towards its breakout points. Since, the level of 540 coincided with other multiple indicators; we witnessed a good u-turn in stock prices. We expect the stock to resume it’s upwards trajectory and hence, one can look to go long on a minor dip for a target of 592 in coming days. The stop loss needs to be fixed at Rs 532.
View – Bullish
Last Close – Rs 258.30
Justification – Overall, the stock has shown tremendous resilience if we consider the complete turmoil the midcap and small cap universe has witnessed over the past few months. Meanwhile, this counter consolidated with minor corrective moves. On Friday, the stock prices surged abruptly with more than average daily volumes. We would interpret this spurt as a beginning of the fresh leg of the rally. Hence, one can look to go long for a target of Rs.287 by following a strict stop loss of Rs 241.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.