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Nifty must hold 9,900 to move towards 10,500-10,700: Sameet Chavan

Nifty Outlook 

Nifty finally enters five-digit territory, further move likely 

It was certainly a great start for the new trading week as well as the June month. Last month, there was a gap down opening on the inaugural day, and, on Monday, precisely that downside gap area was filled to kick off the new month. Our markets continued their upwards trajectory to enter the five-digit territory beyond 10,000 after nearly three months. After a good head start, markets took a pause and saw some profit-booking for a couple of days. But without much damage, the buying re-emerged at lower levels on Friday to conclude the week with whopping 6 per cent gains from the previous weekly close.  

Technically speaking, Monday’s gap-up opening turned out to be a game changer for the bulls. Because after April's ecstatic move, May started with some negativity and the same precisely got reversed with such bump up. Since the previous gap was filled by yet another gap, this time bears got caught completely on the wrong foot. Now looking at the current set-up, we remain upbeat as long as 9,900 holds on a sustainable basis and this is what we alluded post Thursday’s close as well. Since the recent move was mainly propelled by the banking space, we were convinced of the rally in the last couple of weeks. Now, along with banking, we could see contribution from the broader market too, indicating sign of a robust move. This week, although we struggled at 10,200, the positioning of RSI-Smoothened indicates possibility of extending this move towards 10,500-10,700 levels. Hence, traders are continuously advised to stay on the positive side as long as 9,900 is being held. 

Apart from this, we take this opportunity to highlight some notable observations. If we look at two major global indices, DOWJONES and DAX, both have retraced almost 78 per cent from the March lows but we are trading a tad above 50 per cent. Hence, if we have to see the catch-up move, mentioned levels are very much on cards now. 

1. NSE Scrip Code – UBL 

View  –  Bullish 

Last Close – Rs. 1022 

Justification – The entire liquor space has undergone a massive price correction over the past few months. Recently, we witnessed a long consolidation in the stock prices around its multi-year supports. We can now interpret this as a base building process and the stock is now gearing up to give a thrust from this congestion phase. We could witness some early signs of it as the stock prices surged considerably in the last couple of hours on Friday. This is backed by sizable volumes and hence provides credence to the move. The way charts are shaped up, we recommend this stock for a target of Rs.1,108 – 1,140 in the coming weeks. Traders can keep their stop losses at Rs.947. 

2.  NSE Scrip Code – GAIL 

View  –   Bullish 

Last Close  –  Rs.98.10 

Justification – This PSU stock, considered to be one of the Maharatnas, has failed miserably to live up to its investors’ expectation over the past 15-18 months now. However, the recent price move has been a bit encouraging. Although, there is no significant move being witnessed, the overall structure looks promising. With its gradual upward rally, the stock has been consistent and has confirmed a breakout from the sturdy wall around 93. Despite a lack of follow-up buying, the stock has been defending its 89 EMA on the daily charts. Hence, we recommend a buy at current levels for a target of Rs.105-107 over the next 14 sessions. The stop loss should be fixed at Rs.94.40.  

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