IRB Infra's stock has shown some spectacular moves over the past couple of months
The stage for the last week was set previous Friday when our markets
had a late surge to surpass the recent hurdle of 10,850 on a closing basis. Hence, with global markets
showing some favorable cues, we had a cheerful start for the week gone by on Monday at 11,000, marking the highest level since March 06, 2020. This momentum extended on the following day as we witnessed yet another gap-up opening to extend this lead. However, post this, markets
had some reality checks in between to remain in a slender range throughout the remaining part to conclude the week tad below 11,200 mark. The banking index was one of the major charioteers in this extended move, barring Friday, when banking space has undergone some selling pressure to pare down a decent portion of their weekly gains.
In continuation of our previous weekly commentary, our desired levels of 11,200 has now been met. But since there are multiple technical observations that coincide around it, markets will have a daunting task in front of them now. Since, we are extremely overbought, we are in two minds whether to go with the theoretical characteristic of this term ‘overbought’ or the practical one. Because, theoretically, the current placement (78 per cent retracement of the post Covid fall which coincides with 100 per cent ‘price extension’ of recent swings from March bottom) of market is just ideal to see some genuine correction; but practically, as we all know, market has the tendency to surprise us all the time. Hence, rather anticipating things from here on, we would rather let the market give us further indication. As we step into the monthly expiry week, our eyes would be on a few crucial levels. On the upside, 11,250 is the level to watch out for; whereas, 11,050 has now become a key support. As an optimist, one should remain hopeful as long as we are trading above this swing low (11,050) and expect the market to give a breakout in upward direction to extend the move towards 11,350 – 11,400. However, a breach of lower end should be treated as a short-term pause to see some decent profit-booking.
We continue to advise traders to remain light and keep booking profits wherever it's necessary. Also, if our markets have to see any upward move, the banking space plays a vital role in this. Hence, one needs to see whether BANKNIFTY manages to convincingly go beyond 23,000-23,200 or not in the forthcoming week.
1. NSE Scrip Code – NATCO PHARMA
View – Bullish
Last Close – Rs. 729.85
Justification – The entire PHARMA space has been in limelight since the coronavirus pandemic outbreak. One after another, almost every stock in this space or related, has seen a spectacular rally. ‘NATCO PHARMA’ has finally joined hands with its other peers and is witnessing good buying interest since last month. In this process, we witnessed a series of higher highs higher lows and multiple breakouts. Similarly, on Thursday, the stock prices broke out from yet another price pattern ‘Bullish Flag’. The notable observation is the volume at which this breakout happened. We could see more than thrice of average daily volumes to confirm a colossal intraday rally. Hence, we recommend going long for a positional target of Rs.800 in coming days. The stop loss can be placed at Rs.668.
2. NSE Scrip Code – IRB
View – Bullish
Last Close – Rs. 122.55
– This stock was one of the laggards since May 2018, but has shown some spectacular moves over the past couple of months. This month till date, the stock has added whopping 44 per cent gains to the bulls’ kitty. Now, after taking a brief pause, we can see a breakout happening on daily chart. This price action, is collectively known as a ‘Bullish Flag’ breakout, and hence looking at the higher degree time frame charts, we expect next leg of the rally to unfold in coming days. Hence, one can look to buy for a target of Rs.132 in coming weeks. The stop loss can be placed at Rs.120.20.