Head start for the new financial year, fresh record highs soon
The inaugural week of the new calendar year kicked off higher owing to cheerful mood across the globe. However, this early lead could not be extended much due to lack of follow-up buying on the subsequent days. On Wednesday, our benchmark Nifty did register a new high; but it was not even by a single point and hence, eventually turned out to be a formality. We saw modest profit booking after this development in the next couple of days to sneak marginally below the 11,600-mark.
Fortunately, this profit-booking did not extend further as we saw good traction across the board on Friday to conclude the first week on a positive note.
As far as direction is concerned, no brainer we are still in a strong uptrend. Yes, in between we may see hiccups; but one should not get intimidated by such declines. So many stocks had entered an extremely overbought territory; so they needed to cool off a bit and this is what we have seen in the last couple of days. However, this certainly doesn’t change the trend; in fact, it should be considered as a healthy correction to see a sustainable rally in the near term. We advise traders not to look for shorting opportunities, rather use dips to buy into some quality propositions. For the forthcoming week, 11,720 – 11,760 are the immediate levels to watch out for. It’s a matter of time, we would see index surpassing these levels and entering uncharted territory. On the downside, 11,609 followed by 11,593 would now be seen as key support levels for the index.
Traders are advised to stay positive and try to identify potential candidates who have probably given decent corrections and are now gearing up for the next leg of the rally.
Stock recommendations -
NSE Code – Ultratech Cement
Last Close: Rs 4,190.40
Justification – Cement stocks were on a roll on Friday and this stock, too, after forming a base around 89-EMA for the last two weeks has broken out of its recent consolidation confirming a bullish breakout. On the daily chart, stock prices have confirmed a bullish reversal pattern known as ‘Inverse Head and Shoulder’. The said pattern breakout has come with twice its average daily volumes. Considering all these evidence, we recommend buying at current levels for a target of Rs 4,610 and the stop loss should be fixed at Rs 3,975.
NSE Code – TATA Steel
Last Close: Rs 549.30
Justification – We have been contradictory buyers on the entire metal space since the beginning of February series and Tata Steel has been our preferred pick from the space. In the last one and a half month, this marquee name within this universe has already given more than 20 per cent returns. But, still we continue with our optimistic stance and from here on expect further legs to unfold. Technically speaking, we have witnessed a fresh breakout in the counter after struggling around ‘200-day’ SMA for nearly 4-5 days. With Friday’s strong bump up, the stock prices have traversed this hurdle along with a substantial rise in volumes. Thus, we recommend buying at current levels for a target of Rs 590 and the stop loss should be fixed at Rs 526.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.