Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:
This has been a spectacular week for our markets as it brought back a wide smile on traders’ / investors’ faces. And there couldn’t have been a better end to the November series (derivatives) expiry as we saw Nifty surpassing its resistance zone with some authority and thereby removing ambiguity about the near term direction. Despite subdued movement on Friday, index concluded the week well above the 10800 mark by adding more than 3% from previous week’s close.
During the early part of the week, we saw Nifty finding strong support at 10500 and then went on to give v-shaped recovery thereafter. Recently, traders were extremely skeptical about Nifty crossing this ceiling of 10750 – 10800. On Thursday, a massive bump at the opening resulted in breaking this multiple resistance zones quite convincingly; courtesy to gigantic overnight rally in US bourses. Then further developments in some of the heavyweight pockets ensured this breakout on a closing basis. Going by the ‘Gap Theory’, a breach of any major resistance with an upside gap is known as a ‘Breakaway Gap’ and is considered as a sign of strength. Hence, going ahead, we continue to remain upbeat and expect the rally to extend immediately towards 11000 – 11150 levels. On the flipside, Thursday’s gap area of 10782 – 10757 is likely to act as a key support zone now.
It is also important to take a note that there are many events lined up in the first half of December on the domestic as well as international front. Hence, we may see some volatility increasing in coming days. Traders are advised to trade with a proper exit strategy and should keep focusing on individual pockets that may provide better trading opportunities. This week, banking clearly became the charioteer along with IT sector showing some buying interest after recent underperformance. In addition, some interesting moves seen in the ‘Pharmaceutical’ basket towards the fag end of the week.
1. NSE Scrip Code – Bata India
Last Close: Rs 1,043.30
Justification: This stock managed to give a decent recovery from its recent lows and then has been consolidating throughout the November month. On Friday, we witnessed a massive price-volume breakout from the resistance of a ‘Downward Sloping Trend Line’ around 1020. In technical terms, this price development can also be called as a confirmation of ‘Bullish Cup and Handle’ pattern on the daily chart. This was supported by more than twice of its average daily volumes. Thus, we recommend buying for a positional target of Rs 1,160 in coming weeks. The stop loss can be placed at Rs 979.
2. NSE Scrip Code – Torrent Pharma
Last Close: Rs 1,773.80
Justification: The entire Pharmaceutical space has been buzzing on Friday, in fact, there was some gush seen towards the fag end of the week. In the process, this recent outperformer managed to surpass its hurdle of 1747 on a closing basis. The volumes activity has risen substantially to give some weightage to this price activity. Looking at the daily and weekly chart, we expect the continuation of this ongoing momentum. Hence, we advise going long for a target of Rs 1,845 in coming days. The stop loss can be placed at Rs 1,748.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.