Some respite in the market, Metals and midcaps poised for extended moves
The later half of the week brought back smile in traders’/ investors’ fraternity after undergoing some challenging period. The first couple of days extended previous week’s losses; however, the remaining part turned out to be the savior for our market, courtesy, strong cues from global bourses. Although, the overall action in the index was not that big, the broader end of the spectrum did extremely well and hence, we not only defended key support but also managed to reclaim the 10,800 mark.
Let’s dig into a bit of technical now. Tuesday’s session was quite crucial for our market. Despite taking a nosedive in the penultimate hour, our markets somehow managed to defend the recent swing low of 10,583.65 (low on January 29). The daily chart depicted an ‘Inverted Hammer’, which eventually got converted into a ‘Morning Star’ pattern due to a price development on the following day.
Since, there was an occurrence of a ‘Positive divergence’ on hourly chart (on Tuesday); markets had all the reason to give a decent bounce back. This is what we saw in the remaining part of the week. Now, going ahead, as long as 10,580 is not broken, traders should look to trade on the positive side. Before this, 10,720 – 10,646 would be seen as immediate supports. On the flipside, ‘200-day SMA’ level of 10,860 will be watch out for. A move beyond this would trigger a decent up move towards 10,920 – 11,000 levels.
This week’s bounce back was initially propelled by the banking index and later on by IT and Auto. But the only outshining sector throughout was the ‘Metal’ space. As we had anticipated, all constituents within this high beta pocket soared to a great extent. Also, midcaps had shown some signs of revival; do watch out for this as well. All in all, set up looks good for the extended relief rally; but, considering recent moves, it’s better to take one step at a time.
NSE Scrip Code – Oberoi Realty
View – Bullish
Last Close – Rs. 503.10
Justification – The entire realty space has been buzzing since last couple of weeks on the hope of GST rate reduction on under-construction houses. The same is getting reflected in prices too and this stock seems to be a preferred bet within this basket. Last week, we witnessed a breakout from recent hurdles. The volume activity in last few days has risen substantially, providing credence to the up move. We recommend going long for a positional target of Rs 570 in the coming weeks. The stop loss can be placed at Rs 464.
NSE Scrip Code – Sun TV
View – Bullish
Last Close – Rs. 585.90
Justification – This stock has undergone a massive price correction in the last thirteen months. This corrective mode finally seems to have arrested around its 78.6 per cent retracement of the previous multi-year rally. This level coincided with other multiple technical evidences and hence, can be considered as a rock-solid support zone. In the week gone-by, the price started rebounding sharply and in the process has managed to give the first sign of revival on charts. Considering this development, we expect the stock to do well in the near term. Although, our near term target for the existing positions is Rs 615, we expect the stock to give an extended move. Thus, one can look to go long for a target of Rs 672 in the coming weeks. The stop loss can be placed at Rs 559.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.