This week, our market experienced a good roller-coaster ride and has provided trading opportunities for both counterparties. Clearly, bulls had the last laugh as we saw a smart recovery in last couple of sessions to reclaim the 10,300 mark; courtesy to Moody’s upgrade on India’s sovereign rating for the first time in 14 years. The notable outperformer in this move was the entire banking pack as we saw Bank Nifty outperforming by a fair margin and clocking record highs on Friday.
Now, here the confusion arises; because, both major indices, Nifty and Bank Nifty are clearly showing divergences. So, going forward, one need to decide whether the outperforming banking index pushes the Nifty higher or the underperforming index (Nifty) becomes the culprit in dragging its peer lower. Looking at few key technical evidences, our sense is Nifty would remain under pressure and we may see index failing to extend this relief rally. However, in this course of action, it’s very difficult to gauge Bank Nifty’s movement. Hence, we would rather closely observe key levels on both these indices in the forthcoming week.
As far as Nifty is concerned, 10,344 –10,368 seems to be an immediate hurdle; whereas any move below 10,250 would resume downward move to test sub-10,200 levels. We reiterate that traders should not take aggressive positions in the index and should rather keep focusing on individual stocks with a proper exit strategy.
Mindtree - Bullish
Last Close – Rs. 516.45
We have been maintaining our positive stance on Midcap IT counters since last couple of months and ‘Mindtree’ has been one of the preferred picks. If we look at the daily chart, the stock has broken out of the accumulation pattern after forming a strong base around 445. The volume activity too picked up substantially; indicating strong buying interest in the counter. Hence, we recommend buying this stock at current levels for a target of Rs.542 over the next 14 – 21 sessions. The stop loss now should be fixed at Rs.502.
Sun TV - Bullish
Last Close – Rs. 842.55
Of late, we witnessed some corrective move in this stock and the stock is now resting around its previous breakout points since last three days. The weekly chart still looks promising and hence, recent correction can be construed as a pullback move with slightly medium term perspective. One can buy this stock for a target of Rs.930 over the next 14 – 21 sessions. The stop loss should be fixed at Rs.806.
Hero MotoCorp - Bearish
Last Close – Rs. 3631.15
A strong Bull run in this stock took a pause during the early part of September. Since then the stock has been experiencing a corrective phase in a gradual manner. Recently, we witnessed a breakdown from crucial ‘Neckline’ around 3700. Last week, the stock prices resisted around it and have started falling once again. Thus, we expect some weakness to continue in this counter. One can sell this stock for a target of Rs.3480 over the next 5 – 10 sessions. The stop loss should be fixed at Rs.3731.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.