11,450-11,350 can be seen as immediate supports and on the higher side, the rally could extend towards 11,850-11,900, and then beyond 12,000 once Nifty manages to sustain above 11,700.
By Sameet Chavan
The benchmark index, Nifty50, might be trading well above levels that were seen in the last Diwali, but the ground reality is not the same.
If we look at the way some of the stocks from the broader markets were hammered, most of them are now trading near multi-year lows or 52-week low.
Market participants had to undergo a lot of stress as we didn’t see any respite in the market. Finally, in the second half of September, our Finance Minister pulled off a masterstroke by slashing the corporate tax rate.
This certainly bolstered traders’/ investors’ sentiments, which was then reflected in a colossal rally of more than 8 percent in merely two days.
However, the pain is still not out of the system as we can see some indecisive swings thereafter. In the midst of all, the market is at the cusp of a very interesting junction.
In the week gone by, Nifty50 moved in a range of 150 – 180 points to close with a loss of 0.7 percent for the week ended October 25. As per our recent ‘Time Retracement’ analysis, Nifty has reversed exactly in the September month and is now well above recent lows.
But, the million-dollar question remains the same, are we going to see a sustained rally from hereon or not? Honestly, this would probably be the toughest question to answer.
But, we are still hopeful. We have seen bulls trying to flex their muscles a bit and hence, some good days could come for our markets.
On the daily chart, we can see a breakout happening last week from an ‘Inverse Head and Shoulders’ pattern. Although the follow-up move is lacking, and one should remain upbeat as long as the recent swing low of 11,090 is intact.
Meanwhile, 11,450-11,350 can be seen as immediate supports and on the higher side, the rally could extend towards 11,850-11,900, and then beyond 12,000 once Nifty manages to sustain above 11,700.
The Banking index has been a laggard of late, which needs to step up and we expect it to happen soon. Traders/ Investors are advised to keep following ‘Buy on declines’ strategy and should focus on apt candidates which are gearing up for decent moves going ahead.
We hope for the new Samvat to bring back a lot of positivity in the market and by next Diwali, markets should be at much-elevated levels with broad-based rallies from hereon.
Here is a list of top two stocks which could give 6-13% return in the next 3-4 weeks:
Kansai Nerolac: Buy| LTP: Rs 545| Target: Rs 580| Stop Loss: Rs 518| Upside 6%
The paint stocks are on a roll for the last three months. Some of the marquee names like Asian Paints and Berger Paints have given stupendous moves in the past few weeks.
If we track the price action, it looks like they are still not done with it. Kansai Nerolac is also not behind as we have been witnessing decent moves in this stock.
The relative performance may be lacking if we compare with larger names but, looking at the charts we expect catch-up rally to unfold. Prices have finally broken above 520, which acted as stiff resistance in the last one year.
The said breakout is supported with a good increase in volumes. Looking at all the above evidence, we sense a strong upside in the counter in the near term.
We recommend buying this stock at current levels for a target of Rs.580 over the next 14 sessions. The stop loss should be fixed at Rs.518.
Jyothy Labs: Buy| LTP: Rs 171| Target: Rs 194| Stop Loss: Rs 156| Upside 13%
After gyrating in a broad range of 140 – 170 for the last four months, the stock prices have finally broken the range on the upside confirming a rectangular channel bullish breakout.
On the daily chart, we are also witnessing a Cup N Handle breakout which indicates a higher bottom in place. If we observe the price-volume pattern in the last few months, it is seen that the volumes are comparatively higher during the up move whereas on the down move the volumes are lower.
In addition, prices have closed above ‘200SMA’ which was previously acting as stiff resistance and now indicates bullishness across all the major time frames.
Hence, we recommend buying this stock at current levels for a target of Rs.194 over the next few weeks. The stop loss should be fixed at Rs.156.
(The author is Chief Analyst- Technical & Derivatives, Angel Broking)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.