Truncated week in our markets
started off well on the back of US markets
witnessing a strong upsurge on preceding Friday. The entire Asian basket too had a great run early in the morning trade of April 15 but we saw most of these bourses later giving up their gains.
Despite this, we managed to hold our ground and had a gradual up move throughout the remaining part to conclude firmly well inside the positive territory. This was followed by yet another gap up opening, which led to a fresh record high surpassing the peak of 11,760.20, achieved on August 28, 2018, and a recent high of 11,761. The last trading day of the week began with a strong bump up at the opening which later turned out to be a formality as we saw gradual profit taking throughout the remaining part to eventually conclude below the 11,800 mark.
With last week’s up move, the Nifty
has managed to clock highest ever weekly closing and the way it’s shaped up, we will not be surprised to see many such achievements in days to come. Yes, the kind of profit booking we saw on April 18, especially in banking index, does not augur well. But, we would still like to continue with the broader trend, which is strongly bullish. In between, it’s natural to see such hiccups but it certainly does not warrant any kind of trend reversal, at least at this juncture. So rather than pre-empting reversal and adopting a contrarian approach, we would follow stock specific approach for a while.
As far as levels are concerned, Tuesday’s gap area of 11,731.55 – 11,704.60 would now be seen as immediate support. After this, 11,549 can now be termed as a sacrosanct level for momentum traders. Only a move below this would apply brakes on this optimism for a while, till then continue with a buy on decline strategy. On the flipside, 11,800 – 11,857 are the levels to watch out for. But if the above mentioned supports are held, then we will not be surprised to see index hastening beyond these hurdles to climb the 12k mountain. At this juncture, one needs to be extremely stock specific by following a proper exit strategy.
The last four to five months have been excellent for this stock along with its peer counter MGL. Due to last week’s up move, the stock prices are now trading at '52-week high'. The overall structure has been extremely sturdy and the way prices are shaped up, the new high is very much in the offing. Supporting to this price action, the ADX (14) indicator on daily chart is moving northwards from its important mark of 25. This generally provides impetus to stock prices and hence, we expect the acceleration in coming days. Considering all these evidences, we recommend buying at current levels for a target of Rs 357 and the stop loss should be fixed at Rs 311.
Since the last couple of months, we are witnessing some early signs of revival in the stock movement. While it might be too early to comment, a few developments on price front certainly encourage us. The stock managed to rebound from its monthly 89- exponential moving average (EMA0 level of 77 and after a long consolidation, has finally managed to break out from the congestion zone. The weekly RSI-Smoothened has crossed the lower threshold level of 30 in the upward direction after quite a long time. Thus, we recommend buying at current levels for a target of Rs.106 and the stop loss should be fixed at Rs 90.
Disclaimer: The analyst may have positions in any or all the stocks mentioned above.