Vikas Jain
Nifty has been trading in a narrow range over the last week, but the bias has remained positive with mid-caps and small-caps outperforming the benchmark.
Nifty remained negative by 1 percent but mid-caps and small-caps gained 2 percent and 3.9 percent, respectively, from the last week till date.
We believe now Nifty will witness some weakness at the higher level of 9,500-9,600 as we have seen a sharp up move over the last 15 trading days and due to being in overbought zone on daily time frame charts.
Among sectors, Bank Nifty has been a laggard in the current up move and it should witness a strong up move as it has crossed its 20-day short term average after two months.
The potential targets could be in the range of 19,900 and 20,600 levels over the next few weeks.
Nifty Pharma Index has outperformed and it should see some consolidation and corrective phase from the current levels, resisting near to its 200-week average placed at 9,300 levels.
One should follow a stock-specific approach now as the quarterly results season has started and there will be stock-specific reactions. The results and management commentary will be important for the next leg of the move in the market.
Here are three stock recommendations for the next 3-4 weeks:
Cipla | Sell | LTP: Rs 601.95 | Target price: Rs 530 | Stop loss: Rs 640 | Downside: 12%
The stock formed a new 52-week high from its recent lows of Rs 350 levels, completing his one-month strong outperformance.
The key technical indicator RSI is in the overbought region and trading above 70 levels, so one can expect some profit-booking to fill the gap levels.
The stock has completed its 61.8 percent up move of the entire fall from Rs 755-355 levels and faced multiple resistances on various time frames.
Federal Bank | Buy | LTP: Rs 42.50 | Target price: Rs 51 | Stop loss: Rs 37 | Upside: 20%
The stock has found support near Rs 37 mark, which is exactly the 61.8 percent Fibonacci retracement from its 52-week high.
The sector is in positive momentum and mid-cap stocks are witnessing traction.
Key technical indicator RSI has also reversed, turning upwards and as the stock is poised for a breakout from the current levels.
State Bank of India | Buy | LTP: Rs 189.10 | Target price: Rs 225 | Stop loss: Rs 170 | Upside: 19%
The stock has made a double bottom near Rs 175, witnessing positive momentum and forming higher tops on daily charts.
Key technical indicator RSI is showing signs of reversal with strong volume in the last few days and looks poised for a breakout from current levels.
On the downside, multiple supports exist in the range of Rs 175-180, protecting the downside from the current levels.
(The author is Senior Research Analyst at Reliance Securities)
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