Some respite on last day to reclaim 10,800
Last week, we closed with some hopes of a relief rally and on Monday, the proceedings began on expected lines. But at higher levels, market faced a sturdy wall around 11,150, which resulted into a moderate decline for the next couple of days. However, on Wednesday, things became worse as we witnessed a relentless sell-off and the Nifty slid below the recent swing low of 10,782.60. On Friday, th eindex continued its selling streak and gave a sharp correction to sneak below the 10,650-mark. Fortunately, a strong buying emerged at lower levels in the following hour and thereafter, the index had a V-shaped recovery to not only trim all losses but also to enter a positive territory and reclaim the 10,800-mark.
Recent correction got arrested in the first week of August and then the index went into a consolidation mode. But, early this week, the sell-off once again got triggered to breach key support levels. But since we were extremely oversold and reached crucial February lows around 10,600, the market took a complete U-turn and was off lows considerably. Now, technically speaking, we can see a formation of ‘Bullish Piercing’ pattern on the daily chart (in Nifty). The said pattern will show its significance once the index manages to sustain above 10,900. In this scenario, we can expect further recovery towards 11,050 – 11,150. The banking index underperformed a bit amongst the two indices and if the Nifty has to regain any strength, banking index needs to step up. Hence, one needs to closely watch how banking conglomerates perform in the forthcoming week. For Nifty, the support now can be seen around 10,728 – 10,637. In case of breaching these crucial supports, we can see extended correction in the market.
Apart from this, the broader market was clearly the shining pocket on Friday along with some other sectoral movers.
The ‘Nifty MIDCAP 50’ confirms a ‘Bullish Engulfing’ pattern on daily chart and the way it’s shaped up, we can witness sharp short covering moves in the broader market if Nifty manages to give decent recovery. At this juncture, traders are advised to keep a tab on all these possibilities and should act accordingly.
Last Close: Rs.649.25
Justification – Recently, the stock consolidated for nearly three weeks after taking a strong knock of more than 30 per cent in the first half of July. On Friday, we witnessed strong buying emerging at lower levels which accelerated to confirm a bullish breakout from recent congestion zone. The kind of volume activity we witnessed during this intraday surge is quite encouraging and provides credence to the move. Going ahead, we expect a decent relief rally in this counter. We recommend buying this counter for a target of Rs.685 over the next few days. The stop loss should be fixed at Rs.631. BHARAT ELECTRONICS LTD
Last Close: Rs. 99.90
Justification – On the daily chart, the stock prices for the last one month were trading within a range of two crucial moving averages with 200-SMA acting as strong base and 100-EMA acting as a stiff resistance. Now finally prices have broken from this range on the higher side by closing above 100-EMA. The said breakout is supported with sizable volumes and strong bullish candle. In addition, momentum oscillator i.e. RSI has entered the positive zone above the levels of 50 supporting the optimistic stance. Going with all the above evidence we recommend buying this stock at current levels for a target of Rs.111 over the next few days. The stop loss can be placed at 92.40.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.