The entire Pharma space has been once again on a roll after a brief pause
Nifty snaps six-week winning streak, still 11,000 defended successfully
Last week, the market started the proceedings on a sluggish note in the absence of any trigger on the domestic as well as global front. On the following day, we witnessed a good broad-based rally to mark fresh four-month high beyond the 11,300 mark. However, the way things looked at the end of Tuesday’s session, it just turned out to be an illusion in the remaining part of the week. Although there were a couple of attempts made around 11,300, the market was unable to display the strength in a similar fashion. As a result, we witnessed some profit-taking in the latter part of the week to conclude around the lower end of the weekly range.
The market finally snapped its six-week winning streak due to some weakness around 11,300. However, the damage is not big and hence, as of now should only be interpreted it as a profit booking after a relentless rally. Towards the end of the week, we were seeing 11,050 as key support; but the way markets
behaved on Friday around it, this does not appear to be an important support. Hence, we would rather extend the range slightly on the downside and would observe key supports around 10,950-10,870 for the forthcoming week. In case if profit booking extends towards these mentioned levels, it should still be considered as a corrective move and not the actual trend reversal. In our sense, the actual weakness would start only if Nifty sustains below 10,870, and hence, till then one should continue with a stock-specific positive bias. However, on the flipside, 11,300-11,350 has also become a strong ceiling and the fresh leg of the rally would only unfold above this. Till then traders are advised to remain light within a slightly bigger range of 10,870 – 11,350.
For the early part of the week, 11,200-11,250 should be considered as an immediate resistance zone. The banking space has been the weakest link and the way it is placed, the directional move in benchmark would mainly be triggered by the banking stocks only. Hence, all eyes would be on it. Apart from this, the entire Pharma space has been once again on a roll after a brief pause and there were some other sectoral movers also, that kept buzzing and bucking the trend. So, the pragmatic approach would be to focus on individual stocks until the time market remains in the above-mentioned range.
View – Bullish
Last Close – Rs. 782.65
Justification – This has been our preferred stock within the PHARMA since the last month and a half. In fact, last week also we had recommended it for an initial target of Rs 800. Now the way this stock performed over the past couple of trading sessions, it is well poised for a bigger move. With almost every stock within this space is just flying one after another, it’s time for this stock now to show its mettle. The daily, weekly, and monthly time frame charts look extremely promising and the way volume activity has picked up, the stock is likely to have some catch up move to its larger peers. Hence, we recommend going long for extended targets of Rs 808 and Rs 850 over the next few days. Use dips to accumulate more by keeping a stop loss at Rs 743.
View – Bullish
Last Close – Rs. 926.60
Justification – After seeing a spectacular rally in June, this stock literally did nothing during the entire July month. Stock prices slipped into a consolidation mode and kept hovering around the ‘200-day’ SMA. This Friday, which was the last session of the month as well, the stock prices gave a tremendous move after coming out of the long slumber. This price activity was accompanied by sizable volumes, providing credence to the move. The way charts are shaped up now, we expect this stock to perform well over the next few days. Hence, one can look to buy for a target of Rs 965 and the stop loss can be placed at Rs 898.
Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking Ltd. Views are personal.