The overall trend still remains strongly bullish and we continue with our ‘Buy on declines’ strategy but in between, we are likely to see some profit-taking.
After an extended weekend post Diwali, markets started off higher and clocked a fresh record high of 12,963 during the week gone by. Since there was no major follow-up buying seen in major heavyweight constituents, the Nifty was unable to show the 13,000 mark on the screen.
In fact, some profit-booking was witnessed in the last couple of sessions. The week concluded with nominal gains of six-tenths of a percent.
In the previous couple of weeks, markets have already taken a giant leap and mostly all the major positive factors are already priced in. Markets have no fresh trigger to continue the similar kind of pace.
We still do not rule out the possibility of immediate levels of 13100-13200, but the rally may not be that smooth now. The overall trend still remains strongly bullish and we continue with our ‘Buy on declines’ strategy but in between, we are likely to see some profit-taking.
For the forthcoming week, Friday’s low of 12730 will now be seen as key support. A move below this will extend the corrective move towards 12600 - 12450 levels; whereas on the higher side, 12963 is the level to watch out for.
In our intra-week commentary, we had mentioned how the banking index is showing some signs of being overbought and very much on expected lines, we witnessed nearly 1200 points correction in the last couple of days.
Fortunately due to the late surge in banking conglomerates, Bank Nifty closed in the safer territory above 29200.
But the real action continued in the broader markets. Hence, we can still focus on the same. Traders are advised not to trade aggressively now and should continue with a stock-centric approach.
Here is a list of stocks which could give 5-20% return in the next 3-4 weeks:
Sugar being the cyclical commodity, is undergoing some consolidation phase for the last couple of months. Before this, it had a good multi-month rally on the back of a lot of positive news flow for this sector.
On Friday, we witnessed the first sign of strength as stock prices witnessed a good buying momentum along with more than average daily volumes.
It would be too early to comment on this, but stock seems to have spent some time at 200-day SMA and is now ready to resume its uptrend. We recommend going long for a target of Rs 163 in the coming weeks. The stop loss can be placed at Rs 143.40.
Auto stocks had a phenomenal run over the past few weeks, especially the previous laggard counters, who are catching up with some outperformers. Ashok Leyland clearly belongs to this category and it has finally brought back some sigh of relief for many investors.
Since the recent rally was extremely steep in nature, prices on short term charts entered an overbought territory and thus, we witnessed a good profit booking on Friday.
Due to this, we can see a ‘Shooting Star’ pattern on the daily chart, indicating an extension of the profit booking move. Hence, one can look to go short on a minor bounce up to Rs 93 – 94 for a target of Rs 86 in the coming days. The stop loss can be placed at Rs 96.70.
(Sameet Chavan, chief analyst-technical & derivatives, Angel Broking)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.