Banking single handedly drives Nifty towards 11,700
We started off the proceedings for the last week on a positive note, owing to favourable global cues. During the remaining part of the week, we witnessed a steady move in benchmark owing to a lot of sectoral churn. In the process, Nifty gradually marched towards the 11,700-mark, marking its highest close after February 26, 2020.
The ongoing rally across the globe is just extraordinary and we are not at all falling behind. Although, we are not actively participating in index-specific trades since last week (after 11,350-11,400) or so, the focus remained on individual stocks. Yes, but at the same time, we are advocating booking timely profits on trades as well and we would continue to do so. After a certain time, it’s always better to let go of some move and focus on money management. As far as levels are concerned, 11,700-11,750 remains to be an immediate hurdle (coincides with multi-month upward sloping trend line); whereas, on the flipside, 11,600, followed by 11,540, would be seen as key support levels. It may sound a bit repetitive but since we have approached yet another cluster of resistance, we continue to advise some caution at higher levels, to take one step at a time and keep a close eye on key levels. It is also important to take a note that the short-term pause would be seen below 11,540-11,500.
In the last few trading sessions, the banking space started to outperform and during the week, although there was a gradual move seen in Nifty, the banking index seems to have taken a giant leap of 10 per cent. Apart from this, there was a decent stock-specific action seen throughout the week, but we could see some sectoral shift, and hence, one needs to be selective when it comes to stock-picking, going forward.
NSE Scrip Code – CANARA BANK
View – Bullish
Last Close – Rs. 114.75
Justification – Until last week, the banking sector was underperforming significantly, and, in this, Public Sector Banks (PSBs) have been laggards over the past few years. However, the entire banking space seems to have revived and is seeing a catch up move to the broader market. With Bank Nifty surging 10 per cent this week, PSBs managed to finally contribute in the rally on Friday. CANARA BANK, which is considered to be traders’ favorite counter, has confirmed a good price-volume breakout on daily chart. Hence, we recommend going long on a decline towards to Rs.112-110 for a target of Rs.122 over the next few days. The stop loss can be placed at Rs.107.80.
NSE Scrip Code – NAUKRI
View – Bullish
Last Close – Rs. 3389
Justification – In the last five months, a lot of different themes played out well and in this course of action, so many stocks have given multi-fold returns. This stock clearly belongs to this camp as it has steadily been kept moving higher since March lows and has already doubled since then. Recently, we witnessed some consolidation in this counter, which can be construed as a time-wise correction. On Friday, stock prices managed to breakout from recent congestion along with decent volumes. Hence, we expect the stock to resume its uptrend now. Hence, one can look to go long for a target of Rs.3,590 over the next few weeks. The stop loss can be placed below Rs.3,280.
NSE Scrip Code – JSW STEEL
View – Bearish
Last Close – Rs. 281
– After a long underperformance, the Metal space took a U-turn and has managed to give a stupendous move in the last three months. In the initial move, we managed to become early entrants and could ride until the first week of August. However, looking at the overbought condition and some time-wise analysis, we failed to catch the last 6-8 per cent move in these Metal names. In fact, some of the STEEL counters just rallied as if there is no tomorrow without giving a small decline also. Basically, this is the nature of METAL counters and historically it’s proven when they rally, they just keep giving gravity defying moves and vice versa. Although, it’s difficult to expect weakness in such high beta counters when they are in a strong uptrend, we sense some profit booking taking place in the coming week. JSW STEEL
has shown early signs of profit taking on Friday after seeing some selling to close around day’s low. We recommend going short around 283-285 for a downside target of Rs. 270. The stop loss needs to be maintained at Rs.291.