Vikas Jain
Nifty tested the support range of its 20-day average and witnessed a pullback from lower levels with broader market recovery.
Nifty Midcap and Nifty Smallcap indices have outperformed, gaining 3.1 percent and 4.3 percent, respectively, while Nifty has gained 1.2 percent in the week to date.
The benchmark index has completed its time-cycle up-move from its bottoms of 7,511 in March and from its higher bottom of 8,800 levels in May 2020.
We have witnessed a strong up-move across sectors and stocks. In the last 4 weeks, midcaps and smallcaps have gained strength. We believe one should book profits at current levels and increase some cash levels in their portfolios and wait for some corrective action in broader markets.
A breakdown below 11,150 from its short-term average would trigger a sharp selloff in index pivotal and broader markets.
With the derivatives expiry next week, we expect the markets to trade volatile with rollover movement in individual sectors and stocks.
There are a lot of stocks under the ban in the derivatives segment and they would witness unwinding of the positions.
On the higher side, 11,500 CE strike has the highest OI of 31.1 lakh shares while 11,000 PE strike has OI of 22.4 lakh shares.
Here are three trading ideas for the next 2-3 weeks:
ACC | Sell | LTP: Rs 1,419.20 | Target price: Rs 1,280 | Stop loss: Rs 1,530 | Downside: 10%
We believe its 4-week's multiple tops in the range of Rs 1,440-1,460 will cap the up-move and the breakdown of its short-term average will trigger a selloff.
Its key technical indicator, on the short-term timeframe, has reversed from the overbought zone and is on the verge of a reversal.
We believe its long-term moving average (200-week SMA) near Rs 1,510 will act as a reversal point.
Godrej Properties | Sell | LTP: Rs 863 | Target price: Rs 760 | Stop loss: Rs 940 | Downside: 12%
The stock has retraced 61.8 percent from its previous down-move (Rs 1,189-Rs 5,05) and later remained sideways.
The stock’s key technical indicators on the near-term timeframe chart are negatively poised which could drag the stock towards Rs 760 levels.
Any jump above Rs 940 mark will negate a down-move in the stock.
The stock is in the long-term rising trend. Since April 2013, it has tested its 100-week SMA multiple times and later reversed.
Whenever its RSI has reversed after testing its bull market support zone (40-33), it has supported the stock to record new high.
The stock has also given a breakout from its short-term falling trendline and rose to a 2-month high.
We believe that the current up-move will continue and the stock will test its medium-term resistance zone.
(The author is Senior Research Analyst at Reliance Securities)
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