Eventful week on the global as well as domestic front
Last three weeks have not been so good for our markets mainly on the back of some domestic concerns. Last week, our markets started the proceedings on a sluggish note and once again the major support zone of 11,650 – 11,630 was challenged in the initial part. Fortunately, similar to recent patterns, strong buying emerged at lower levels which pushed the index significantly higher to enter a relatively safer zone. Although, the last couple of days saw some struggle around 11,800 – 11,850, the Nifty eventually managed to close a tad below the 11,800-mark by adding more than half a per cent to the previous week’s close.
With reference to our recent articles, despite several attempts, the Nifty managed to hold key support zone of 11,630 – 11,591. These levels were critical supports because 11,591 is the higher end of the ‘Upward Gap Area’ created post the exit poll numbers. Moreover, 11,630 being the 161% Fibonacci retracement levels of the small up move from 11,769.50 to 12,000.35. This level coincided with the ‘Potential Reversal Zone’ as per the ‘Bullish Wolfe Wave’ structure, which was clearly visible on hourly chart.
After this week’s strong bounce back, the above mentioned technical evidence clearly proved its significance. Now, we are stepping into an eventful week on the global as well as domestic front and hence, traders are advised to prepare themselves for some bigger swings. It would be really interesting to see how our market reacts on the global developments in the initial part and then the Union Budget scheduled coming Friday will probably set the tone for the next course of action for our markets.
Technically speaking, we still remain hopeful as long as 11,630 – 11,591 are not violated and on the higher side, we will not be surprised to see a move towards 12,000 and beyond in next few days. Before that 11,850 – 11,900 has become a sturdy wall, which needs to be surpassed convincingly. We hope it be broken in the first half of the coming week, which will trigger some sharp moves in the upward direction. Sector specific, banking remains to be an outperforming space and with this week’s price action, we can see some revival in ‘Metal’ and selective ‘Pharma’ names as well. Lastly, the ‘Midcap’ index is somehow gearing up for strong rally and if benchmark manages to head higher, we would see massive outperformance from this universe. Hence, the ideal strategy would be to focus on such potential candidates.
NSE Code – TATASTEEL
Last Close: Rs 504.40
Justification – The ‘Metal’ sector has been one of the underperforming sectors in last many months. Recently, it has been consolidating in a range and with last week’s surge; we can see a decisive breakout happening in ‘Nifty Metal’ index on daily chart. Within this space, ‘TATASTEEL’ has always been our preferred bet. We can see a similar structure in this high beta counter and looking at the weekly chart, we will not be surprised to see decent moves in coming weeks. Thus, we recommend buying for a target of Rs 538 and the stop loss should be fixed at Rs 481.
NSE Code – ENGINERSIN
Last Close: Rs 121.35
Justification – Of late, most of the ‘PSU’ stocks are on a roll as we saw some hopes/ interest getting built post the election verdict. Within this, ‘ENGINERSIN’ certainly catches our attention and the way it has shaped up, we will not be surprised to see bigger moves in coming weeks or months. Overall, it’s been consolidating since last nine months but recently we saw emergence of strong buying along with rise in volumes, providing credence to the move. It’s on the cusp of a breakout and we anticipate it to happen soon. We recommend buying at current levels for a target of Rs 134 and the stop loss should be fixed at Rs 114.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.