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Last Updated : Jul 11, 2020 11:08 AM IST | Source: Moneycontrol.com

Deploy buy on dips strategy as Nifty could consolidate; Resistance at 10,980-11,100

The strategy should be to buy on declines as technically the stock-specific formations are clearly indicating that the market is heading higher to hit the level of 11100/11200.

 
 
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The strategy should be to buy on declines as technically the stock-specific formations are clearly indicating that the market is heading higher to hit the level of 11,100/11,200, Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, said in an interview with Moneycontrol’s Kshitij Anand.

edited excerpts:

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Q) What led to the price action on D-Street in the week gone by?

A) Whether it is in terms of trading range or weekly gains, the last week remained relatively quiet for the market. Bajaj Twins and Reliance Industries and some few metal stocks brought the market up.

If ITC had not broken 6 percent, the Nifty/Sensex would have gone even higher. The Bank Nifty was in the lead in the second half of the week but then the Metal Index overtook the leadership.

Q) What is the outlook for Nifty in the coming week? And, what are the important levels to watch out for?

A) Initially, the Nifty may come down to fill the price gap, which it has left on a weekly basis. It is between the levels of 10,631 and 10,676.

In case, the Nifty fails to fill the same fully, then it would result in sharp recovery in the second later part of the week.


The strategy should be to buy on declines as technically the stock-specific formations are clearly indicating that the market is heading higher to hit the level of 11,100/11,200.


The Nifty50 has major supports at 10,676, 10,631, and at 10,550. On the higher side, 10,850, 10,980, and 11,100 would be hurdles.

Q) Any particular strategy which traders could execute for the week?

A) The strategy should be to buy on declines. Buy Nifty between 10,650 and 10,550.  Keep a final stop loss at 10,450 for the same.

On the upside, side around 11,100 either take partial profit on long positions or reduce weak long positions or investment.

Q) Any top 3-5 stocks which investors can bet on in the coming week? Please give a small rationale with target and stop-loss?

A) Here is a list of three ideas for the coming week:

SAIL: Buy

The stock has managed to survive above the 50 percent retracement level of 36 on a weekly basis.  It suggests at sellers are vanishing. The major oscillator RSI was comfortably above the level of 70.

It shows that the stock is in the firm grip of bulls. Also, based on the overall performance in Asian markets, we feel Metal sector should do well for the next couple of weeks.

SBI Life Insurance: Buy| LTP: Rs 859| Target: Rs 1000| Stop Loss: Rs 830| Upside 16%  

The stock is forming a running triangle.  Although the stock is in the pullback mode, it is heading higher with a bullish price gap and rise in delivery based volume.  Technically, it should hit the level of 1000.  Keep final stop loss at 830.

Escorts: Buy| LTP: Rs 1137| Target: Rs 1300| Stop Loss: Rs 1080| Upside 14%  

On a weekly basis, the stock gained 7.25 percent and entered into the blue sky zone.  On a weekly and daily basis, the major oscillator RSI was into the overbought territory but reversal pattern was missing.

Such type of formations generally, acts as trending formation.  The strategy should buy at 1,140 and more at 1,100. Traders could keep a final stop loss at 1,080 and a target at Rs 1,300.

Disclaimer: The views and investment tips expressed 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 taking any investment decisions.

First Published on Jul 11, 2020 11:08 am
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