It was certainly an eventful week for our markets and importantly, whatever action happened for the major part, it was only on the domestic factors. Post the weak session on Monday, our markets opened significantly lower on Tuesday, taking cues from the exit poll numbers and abrupt Resignation of RBI Governor Mr. Urjit Patel. However, market left everything behind and had a spectacular recovery on the same day to defend key levels. This lead extended on the following day as market gladly welcomed appointment of a new governor Mr. Shaktikanta Das. Last couple of days was a bit subdued; but eventually Nifty concluded the week by adding over a percent to the bulls’ kitty.
Tuesday’s session was a critical one for our market and the way it recovered, it certainly set the tone for some optimism. The low during the day precisely coincided with the 61.8% Fibonacci retracement of the recent up move. In addition, the other heavyweight index (Bank Nifty) managed to reclaim its position above the 200-day SMA, which was a sign of strength. But the real highlight was the smart rally in ‘Midcap’ index, which continued for one more day as well. In last couple of sessions, index struggled after reaching the crucial point of 10840. We saw some tentativeness around it and hence, can be termed as a corridor of uncertainty. Let us understand why this level has some significance? On the hourly chart, we had a breakdown from this crucial swing low on December 05. Hence, this previous support is now acting as a resistance. Secondly, we can see a convergence of two important trend lines on daily chart precisely around the same level. Hence, unless we see Nifty breaking out convincingly from this wall, traders should avoid aggressive bets in the market.
But once the Nifty manages to surpass 10840, we may possibly see the beginning of Santa rally in our market, which would immediately lift the index towards 10941 and above. On the downside, 10749 followed by 10700 would be seen as crucial supports. This week, our markets reacted mainly on domestic factors; but now, the focus again may shift to the outer world. One needs to keep monitoring how things pan out across the globe and with US fed meeting slated in the forthcoming week, we may see some volatility in the global peers.
1. NSE Scrip Code – Petronet
View – Bullish
Last Close – Rs. 217.30
Justification – Since last three months, this stock has been vacillating within the boundaries of a ‘Triangle’ pattern. With Friday’s strong move, the stock finally managed to confirm the breakout from the same along with higher than average daily volumes. In addition, the RSI-smoothened oscillator is showing a positive crossover, indicating this move to extend in days to come. Thus, we recommend buying for a positional target of Rs.230 in coming days. The stop loss can be placed at Rs.212.
2. NSE Scrip Code – Raymond
View – Bullish
Last Close – Rs. 849.65
Justification – During the mid-October, this high beta midcap counter formed its base around the 200-SMA on weekly chart. Since then we have been maintaining our positive stance on the counter. Recently, we saw prices struggling around 825, which eventually became the multiple resistance zone. On Thursday, there was a massive bump seen at the opening well above this hurdle and thereby, confirmed a breakout with a ‘Breakaway Gap’. As per the gap theory, this development is considered as a strong bullish sign and hence, Friday’s profit taking should be interpreted as a good buying opportunity for a target of Rs.934 in coming days. The stop loss can be placed at Rs.828.
3. NSE Scrip Code – Voltas
View – Bullish
Last Close – Rs. 578.75
Justification – Of late, we did witness muted moves in this traders’ favorite counter. However, in last four days, the stock seems to have attracted some buying interest and hence, has picked up good momentum. On Friday, we saw prices traversing the ‘200-SMA’ placed around 569 with some authority. This also confirms a breakout from the trend line resistance and thus, looking at the weekly chart, we expect this ‘Tata Group’ company to outperform in the near term. We advise going long for an immediate target of Rs.630 and for this strategy, the exit should be placed below Rs.561.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.