Market lacking clear direction, wait for a breakout
It was yet another week of consolidation for our markets in the absence of major triggers. Nifty started off well with some hope of surpassing the stiff hurdle of 12,000, but once again the attempt turned unsuccessful. During the remaining part of the week, it kept vacillating around the lower band of the range to eventually conclude tad above the 11,800-mark.
Although it was a week of consolidation for our markets, the overall bias remained on the negative side and hence, any intra-week pull back was getting sold into. Now, with this price development we can see the trading range getting shrunk further and whenever this happens, soon we get a breakout (on the either side) from the congestion zone. On the lower side, 11,769 is the level to watch out for. Any sustainable move below this would trigger sell off to head towards 11,600-11,550 levels. However, looking at the broader picture, we are still hopeful and expect the market to breakout in the upward direction. On the higher side, 11,950-12,000 has become a sturdy wall.
At this juncture, the pragmatic strategy would be to stay light and wait for breakout from the mentioned range to create aggressive positions. Meanwhile, keep focusing on individual stocks that are providing better trading opportunities.
1. NSE Code – PI Industries
Last Close: Rs 1,170.05
Target: Rs 1,250
Stop loss: Rs 1,128
Justification – Despite the overall broader market destruction, this stock has been maintaining its sturdy structure since a long time. On Friday also, it was clearly bucking the trend and in the process, has managed to give yet another breakout to clock fresh record highs. If we look at the volume activity, it has risen substantially; providing credence to the price development. We expect this outperformance to continue and fresh leg of the rally to unfold in days to come. Thus, we recommend buying at current levels for a target of Rs 1,250 and the stop loss should be fixed at Rs 1,128.
2. NSE Code – Wockpharma
Last Close: Rs 387.25
Target: Rs 424
Stop loss: Rs 372
Justification – The entire ‘Pharmaceutical’ space has been undergoing a difficult period and there has been no respite even after underperforming for nearly four years now. The ‘Nifty Pharma’ index is trading at its multi-year lows and on Friday, we saw some signs of near-term bounce. Some of the larger peers rebounded sharply to provide some ray of hope for this beaten down sector. We like’ Wockpharma’ because it has been making valiant efforts to surpass its hurdle of Rs 400, which would unfold a strong upward rally. But before this, we have been witnessing some buying at lower levels and hence, with an anticipation of a breakout, we recommend buying at current levels for a target of Rs 424 and the stop loss should be fixed at Rs 372.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.