Stock calls and outlook on Nifty
by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:
The merry days continues for our market after undergoing some stressful period of nearly five months. Unlike the previous week, the intra-week action was not as smooth as it was; but as we generally say all is well that ends well. The index managed to reclaim the 11350 mark with an authority; bringing the smile back on a lot of retail investors.
With a technical point of view, the rally began after breaking out from a ‘Bullish Diamond’ pattern on the weekly chart during the mid-July. Since then a series of bullish price developments have been observed. Some would say markets
are overbought but we do not want to be in this bandwagon as of now.
The structure is still strong and if we meticulously observe, some of the previous laggards have started to participate like, ICICI Bank, Axis Bank, and PSBs. In addition, we had opined about the midcap index probably showing signs of forming a base. The anticipation has now turned into a confirmation and hence, we believe that there is still a lot more to offer in days to come. Friday’s strong rally is the perfect example why one should refrain from shorting this market at this juncture, rather capitalize such declines to buy into.
As far as levels are concerned, it’s a matter of time, we are likely to hasten towards 11,430 - 11,500 and since it’s an uncharted territory, further legs will keep unfolding as we move forward. For the forthcoming week, 11,290 followed by 11,234 would be seen as immediate support. One notable observation to sum it up, during the week, a lot of stocks from the cash segment started to show some life and is poised for decent moves. One can look to target such potential targets which may offer better trading opportunities.
View – Bullish
Last Close – Rs 419.70
Justification – During the penultimate week, the stock prices finally came out of its congestion zone which in technical terms can be interpreted as a breakout from the ‘Triangle’ pattern. This was accompanied by higher than average daily volumes, providing credence to the breakout. However, due to lack of follow up buying, the stock corrected a bit towards the trend line support of 412. As expected, the strong buying emerged at lower levels, which validates this corrective move as a pullback move and the stock would now possibly start the fresh leg of the rally. Hence, we recommend buying for an upside target of Rs.469 and stop loss at Rs.401.70.
2. BOMBAY BURMAH TRADING CORP
View – Bullish
Last Close – Rs 1,614.70
Justification – This stock has undergone some decent time correction over the past three months. Recently, there were couple of attempts made to break through this congestion zone in the upward direction; but all turned unsuccessful. However, the bulls did not lose their hope; in fact, they came back strongly on Friday and provided enough force to confirm a decisive breakout above the sturdy wall of 1582. With this, the weekly charts are now looking extremely promising. Thus, looking at the rising slope of ‘RSI-Smoothened’, we expect the stock to do well in days to come. One can look to go long for a positional target of Rs.1810 in coming weeks. The stop loss needs to be fixed at Rs.1509.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.