NEW DELHI: The Nifty50 managed to clock handsome gains in the last trading session, which helped it regain the crucial psychological level of 7,400, but turbulent times are not yet over for the index.
Yet shorting the index might not be a very good idea even though the structure of the market remains weak, say experts.
The index bounced back from the oversold levels of 7,200-7,250 in the week gone by and is now likely to retest the crucial resistance levels in the 7,500-7,550 range on the upside, they said.
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“On Friday, the bulls made an attempt to claw back to the 7,420 level, which had been holding fort till last week. However, the overall structure (weakest of sectors showing highest gains) of the market has weakness embedded in it,” brokerage GEPL Capital said in a report.
The defending levels for the bulls, which are placed at 7,356 and 7,204 in that order, still stand intact. “This raises a flag of caution for the ‘bars’ – one shouldn’t be shorting the index and going gung-ho. On the upside, the first hurdle would be at the 7,475 level and the previous weekly high at 7,605,” the report said.
Wait & watch are the key words for the coming weeks.
Nifty50 futures saw a weekly closing at 7,430.70 with a marginal loss of 15.55 points. Technically, Nifty futures have bounced from the important support level of 7,200 on the daily charts.
“The short-term trend still looks downward, as it has seen a negative weekly close but made a reversal candlestick pattern, called hammer. In the near future, Nifty50 may test the 7,550 level, which is its immediate important resistance level. On the downside, the immediate support level is at 7,300 level,” said Vivek Gupta, CMT – Director Research, CapitalVia Global Research.
Here is a list of eight stock strategies that different experts have recommended to their clients with an investment horizon of 5-21 months.
Analyst: Rohit Gadia, Founder & CEO, CapitalVia Global Research
BHEL: Buy; Stop loss Rs 144; Target Rs 155
The stock has formed a reversal candlestick pattern at the bottom of the weekly charts which indicates some recovery can be in the stock at least in the near term. The stock is showing good accumulation on the short-term charts and may trade upside with the crossing of its resistance of Rs 148.50. One can get targets of Rs 153, Rs 155 on it and keep stop loss of Rs 144.
Ashok Leyland: Buy; Stop loss Rs 84; Target Rs 90.50
The stock has bounced after taking support at its 200 DMA and is accumulating below the resistance level of Rs 87.20. It is likely that the stock will continue to show positive movement in near-term with the crossing of mentioned level.
Traders can initiate the long position on the stock for a target price of Rs 90.50, for which the stop loss should be kept at Rs 84.
Arvind: Buy; Stop loss Rs 305; Target Rs 335
After a short-term correction from the higher level, the stock is accumulating below the resistance of Rs 320 and is forming an ascending triangle of short-term charts.
It is likely to show positive movement with the crossing of the mentioned level. One may get the target of Rs 335 if sustains above the immediate support level of Rs 305.
Marico: Sell; Stop loss Rs 225; Target Rs 209
The stock is in a bullish trend since last week. It was trading with negative sentiments. Given the fact it closed in red, it has strong support at the level of Rs 217. If the stock breaches this level, which is very likely, one can keep the target of Rs 209 with a stop loss of Rs 225 on the higher side.
Infosys: Buy; Stop loss Rs 1,115; Target Rs 1,215
The stock is showing a bullish trend and is trading sideways at higher levels from the last few weeks. Recently, it has given breakout from the previous resistance level and is now consolidating above the same with the positive sentiments.
It is trading above both its 50 and 200 DMAs, with the crossing of the resistance of Rs 1,165. The stock is likely to continue the positive movement, where longs can get accumulated for the target of Rs 1,215, and a stop loss of Rs 1,115.
Analyst: Sameer Chavan, Technical Analyst at Angel Broking
Vedanta: Buy; Stop loss Rs 60.50; Target Rs 73
The ‘metal & mining’ space has been a clear underperformer over the past 18 months. The trend in all time frame charts remains bearish. However, having said that, the stock has now reached its multi-year ‘downward sloping trend line’ level of Rs 65; which may provide a decent support for the stock.
In addition, this support almost coincides with the 127 per cent retracement of the previous upward move from Rs 110.72 to Rs 297.61. “We are also observing a series of ‘positive divergences’ in the weekly ‘RSI’ momentum oscillator,” the analyst said.
“Thus, we are expecting an effect of this divergence after reaching this very strong support zone. Hence, we advise traders to buy this stock at current level to a decline up to Rs 64 for a target of Rs 73 in coming 14 to 21 trading sessions. The stop loss for this trade set up can be kept at Rs 60.50,” he said.
Century Textiles: Buy; Stop loss Rs 490; Target Rs 551
Post the recent correction, the stock is currently trading near the trend line support. On Wednesday, the prices had formed a ‘Bullish Hammer’ pattern on daily charts. The mentioned pattern is a trend reversal pattern and formation of the same near the support indicates that the prices could give a pullback move in near term.
“The ‘RSI Smoothened’ indicator is trading in oversold zone and hence, we are anticipating a pullback move in the counter,” he said.
“We advise traders to buy this stock at current levels and on declines up to Rs 512 for a target of Rs 551 in coming 14 to 21 trading sessions. The stop loss for this trade set up can be kept at Rs 490, ” he said.
Bank of Baroda: Buy; Stop loss Rs 119; Target Rs 140
Similar to its peer counters, this stock too has underperformed significantly in last 10 months. “After a massive fall of nearly 30 per cent in the last couple of months, we are now observing some early signs of reversal,” he said.
The daily chart depicts a ‘Bullish Hammer’ pattern, which got confirmed on Thursday. “The ‘RSI-Smoothened’ oscillator on the daily chart has given a positive territory well inside the oversold territory and thus, we expect it to lead a sharp bounce in the near term,” he said.
“Considering the current chart structure, we advise traders to buy this stock only on declines at Rs 126 for a target of Rs 140 in coming 14 to 21 trading sessions. The stop loss for this trade set up can be kept at Rs 119,” the analyst said.