After a couple of days of consolidation, bulls have taken full control of Dalal Street from Wednesday and the Nifty rallied almost near the 17,800-mark on Friday.
However, selling and profit-booking in the last hour of trade made the Street cautious. The index fell 44 points on Friday to settle at 17,585.20 and formed a bearish candle on the daily charts, but gained 1.24 percent during the week to form a bullish candle on the weekly scale.
Experts also turned cautious after the stellar run and advised investors to stay light on positions with a strict stop-loss before getting a firm direction in the coming weeks.
“The trend is extremely strong, but honestly, the current move is not giving us comfort at all. We reiterate that when things start to look hunky-dory and there are no signs of correction, the market surprises. It's difficult to predict the precise time, but it's always better to be safe than sorry," said Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking.
“As of now, we are not advising to short but at least one can book profits on a regular intervals and stay light on positions. Friday's sharp correction from higher levels is clearly an indication of this, and, hence, we continue with our cautious stance," he said.
As far as levels are concerned, 17,700-17,800 is to be seen as the immediate hurdle. On the flipside, 17,450-17,250 should be treated as key supports. The first sign of real weakness would come only if the market starts sliding below the lower range, he said.
“The banking space contributed the lion’s share to the last three days' rally as we saw Bank Nifty coming out of its long slumber to post a fresh record high. In fact, on, Friday as well, the broader market was sulking after the initial upmove. But the banking index managed to close in the green," he said. The Bank Nifty rallied 3 percent during the week.
Going ahead, Chavan feels all eyes would be on this heavyweight basket, because if Nifty has to move towards 18,000, this space needs to continue its momentum.
In addition, "the broader end of the spectrum had a fabulous run throughout the week, but we saw some decent profit-booking in this space as well on the last day, which does not bode well. Hence, we remain a bit sceptical and we expect the picture to get clear in the coming week itself."
Here are 10 trading ideas by experts for the next 3-4 weeks. Returns are based on the September 17 closing prices:
Jay Thakkar, Vice President and Head of Equity Research, Marwadi Shares and Finance
Nifty Bank and Nifty private sector Bank Index have provided a breakout, and from here on, the participation from these indices will definitely keep the market in an uptrend.
The bank index has provided a breakout from the falling trend line, with a clear buy crossover in its momentum indicator, with an increase in volumes. Hence, we recommend the stock for a short-term target of Rs 1,685/Rs 1,720 and a stop-loss of Rs 1,545.
The stock has formed a nice symmetrical triangular pattern on the hourly chart, which is in its wave 4. Here on, wave 5 should resume and it will take the stock to the Rs 770-Rs 800 level in the short term. The momentum indicator is well in the buy mode -- from an hourly to monthly time frame. Hence, the bulls have absolute control over the short- to medium-term.
The stock, after having provided a breakout from a sideways consolidation, has been trending higher, forming higher tops and higher bottoms, with an increase in volumes and fresh buy crossover in its momentum indicators.
The stock has also seen a long build-up on the derivatives front, which further confirms that the trend is strong in the short term. Hence, we recommend it for a target of Rs 770-795, with a stop-loss of Rs 696.
Shrikant Chouhan, Head, Equity Research (Retail), Kotak Securities
After a sharp pullback rally, the stock is hovering in the Rs 410-Rs 430 range. Currently, LIC Housing Finance is trading near the 200-day simple moving average (SMA) and the texture of the charts indicates a strong possibility of a fresh uptrend wave from the current levels.
For positional traders, Rs 400 or the 20-day SMA would be the key support level. Above it, the uptrend formation will continue up to Rs 450-470.
State Bank of India: Buy | CMP: Rs 454.10 | Stop-Loss: Rs 440 | Target: Rs 475 | Return: 4.6 percent
After a sharp rally, the stock is witnessing some selling pressure near the Rs 450 level. However, the medium-term trend is still positive. On daily charts, the stock has formed a strong uptrend continuation formation, which is broadly positive. For trend-following traders, Rs 440 would be the sacrosanct level. As long as it's trading above the same, the uptrend formation will continue till Rs 475.
After a strong rally from Rs 3,750 to Rs 4,200, the stock is currently consolidating in the Rs 4,000-Rs 4,200 price range. On the daily and weekly charts, the stock has formed a promising higher, high and higher, low formation, which supports further uptrend from the current level.
Unless it trades below Rs 4,000, positional traders can retain an optimistic stance and look for a target of Rs 4,500. Fresh buying can be considered now, and, on dips, if any, between Rs 4,110 and Rs 4,080, with a stop-loss below Rs 4,000.
Santosh Meena, Head of Research, Swastika Investmart
It took support at the sacrosanct support level of Rs 220, which coincides with its 200-DMA. After that, it is likely to witness a breakout of a bullish inverse Head and Shoulders formation.
DB Corp: Buy | CMP: Rs 100.25 | Stop-Loss: Rs 93 | Target: Rs 115 | Return: 14.7 percent
It is bottoming out with a rounding bottom formation and managed to close above its all-important moving averages.
Bharti Airtel: Buy | CMP: Rs 728.15 | Stop-Loss: Rs 686 | Target: Rs 800 | Return: 9.9 percent
The counter is continuing its strong bullish momentum, following a breakout of 14 years of consolidation, and it is likely to head towards the 4-digit mark very soon.
Ashis Biswas, Head of Technical Research, CapitalVia Global Research
Maruti Suzuki: Buy | CMP: Rs 7,014.45 | Stop-Loss: Rs 6,670 | Target: Rs 7,350 | Return: 4.8 percent
The stock has given a breakout of an Inverse Head and Shoulder pattern on the hourly chart. The breakout follows a bullish trend on the daily chart. The stock trading near the support of the 200-day exponential moving average (EMA) line. We believe the stock could rise from this support level, and, hence, recommend a buy with a target of Rs 7,350 and stop-loss of Rs 6,670.
Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking
HPCL: Buy | CMP: Rs 282.95 | Stop-Loss: Rs 274 | Target: Rs 298 | Return: 5.3 percent
Oil marketing companies, especially BPCL and IOC, have done well recently. Both stocks are trading at their 52-week highs. But HPCL has been a laggard and could not move in tandem with its peers. The way it has shaped up, we may see some catch-up from this counter in the coming days.
On the daily time frame chart, the 'Inverse Head and Shoulder' pattern is clearly visible and the breakout of the same has been confirmed during the latter part of the week gone by. Looking at the rising values of the momentum oscillator, we recommend a buy for a short-term target of Rs 298. The stop-loss can be placed at Rs 274.
Disclaimer: The views and investment tips by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before making any investment decisions.
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