By Jigar S Patel, senior manager - equity research at Anand Rathi
Throughout the week ending May 10, bearish sentiment prevailed as key market indices faced significant downward pressure across most sessions. Despite attempts to surpass the 22,600 mark, the Nifty spot index faltered and slipped below 22,000 levels. Though it didn't maintain these lower levels, the pressure remained palpable, resulting in a weekly loss of approximately 2 percent, settling just above 22,000.
From a technical standpoint, the index is below the lower boundary of an upward channel, and breaching the same could signal deeper market concerns. Looking ahead, a drop below 21,900, the previous swing low of 21,777, may induce market panic.
Conversely, the FIIs long-short ratio in index futures, at around 32 percent, suggests an oversold market nearing a potential rebound. Resistance is expected at 22,300, with a close above potentially confirming a bottom until election results. Traders are advised to remain light from here on since we are now approaching the final phases of the election, which is a mega event.
Meanwhile, the Nifty Bank continued its downward trajectory from the upper end of its rising channel, breaching support at 48,500 to end the week down approximately 3 percent. Now approaching the 47,000 mark, a pivotal support level marked by both a rising trendline and a curved trendline, its behaviour here will be crucial in the coming week. Breaking below could further dampen sentiment, while holding above may reignite upside momentum.
Here are three buy calls for the short term:
Aegis Logistics: Buy | LTP: Rs 598.6 | Stop-Loss: Rs 575 | Target: Rs 640 | Return: 7 percent
Aegis Logistics is marked by a significant shift in its price action. A detailed scrutiny of its daily chart reveals a pivotal occurrence. There is an emergence of a bullish candlestick precisely on the middle Bollinger band after a 19 percent correction from its recent peak. This nuanced observation is complemented by a compelling insight from the indicator analysis, as the daily stochastics depict a hidden bull divergence.
This convergence of technical signals not only underscores the resilience of Aegis amidst market fluctuations but also amplifies the optimistic sentiment surrounding the stock. Consequently, informed market participants are urged to contemplate initiating long positions within the suggested price range of Rs 595-600, anticipating a targeted ascent to Rs 640.
Prudence dictates the implementation of risk management strategies, with a recommended stop-loss order positioned near Rs 575 on a daily closing basis, ensuring mitigation against adverse price movements.
Titan Company: Buy | LTP: Rs 3,290 | Stop-Loss: Rs 3,165 | Target: Rs 3,500 | Return: 6 percent
Since reaching its peak of around Rs 3,800 on April 1, 2024, Titan has been pulled down as the market has experienced a significant downturn, with a decline of 16 percent in price. However, amidst this downturn, a compelling opportunity has emerged. Presently, the market exhibits a Bullish AB=CD Pattern with a 1:1 leg ratio, signalling a potential reversal near the Rs 3,200-3,250 zone.
This pattern, coupled with a noteworthy observation from the relative strength index (RSI), adds to the allure of the current juncture. The RSI indicator reveals a complex structure resembling a W shape within the oversold zone, suggesting a robust potential for an upward price movement.
Given these favourable technical indications, investors are encouraged to consider buying within the Rs 3,300-3,250 zone, with an optimistic target set at Rs 3,500. To safeguard against adverse price movements, it's advisable to implement a stop-loss order at Rs 3,165, based on daily closing prices.
Hindustan Aeronautics: Buy | LTP: Rs 3,873 | Stop-Loss: Rs 3,688 | Target: Rs 4,100 | Return: 6 percent
In the current market scenario, a significant event is unfolding within Hindustan Aeronautics (HAL). Analysis of its daily chart reveals the emergence of a Bullish Engulfing candlestick pattern (on May 8), a crucial signal indicating potential upward momentum. This pattern's occurrence aligns precisely with the daily middle Bollinger band. This confluence of factors serves to bolster positive sentiment surrounding HAL, suggesting a favourable outlook for the stock.
Furthermore, examining the indicator dynamics, it is observed that the daily stochastic oscillator has made hidden bull divergence. This condition typically implies an underlying bullish bias within the stock's movement.
Consequently, market participants may consider initiating long positions within the price range of Rs 3,825-3,875, with a target at Rs 4,100. It's prudent to manage risk by placing a stop-loss order near Rs 3,688 on a daily close basis.
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