Trading started with a downside gap on Monday (June 15) as the second wave of coronavirus started haunting market participants across the globe.
The sell-off extended to test the sub-9,750 levels but the benchmark made a sharp recovery to end the session in the positive territory. On Tuesday, the news of a clash at the India-China border emerged, and within no time, markets nosedived and remained under pressure for some time.
Fortunately, once again we managed to defend the key levels in the midst of all this uncertainty. The last two sessions turned out to be excellent for the bulls as we witnessed a good broad-based rally to eventually conclude the week convincingly above the 10,200 mark.
For the last couple of weeks, 10,000 had been acting as a sturdy wall. Due to the smart rally towards the fag end of the last week, we finally managed to traverse this barrier and head towards the recent highs.
It is always good to see when a rally is mainly propelled by the banking conglomerates because it generally provides credence to the move.
Looking at Friday’s close, the overall setup looks good and ideally we should make a move beyond our recent highs of 10,350-10,400 to test higher levels of 10,600-10,800 in the forthcoming week.
But the threat of the second wave of COVID-19 and the geopolitical concerns are likely to loom over the market for some time.
Hence, if there is no escalation with respect to this, the markets are likely to continue to rise. For the time being, 10,100 followed by 10,000 would be seen as an immediate support zone.
Now, the base seems to have shifted higher from 9,700 to 10,000 and here a breach of 10,000 would again apply brakes on the optimism.
Looking at the broader market participation last week, traders need to keep focusing on individual stocks.
Here are two buy ideas for the next 3-4 weeks:
Bajaj Finserv | Buy | LTP: Rs 5,925 | Target price: Rs 6,200-6,400 | Stop loss: Rs 5330 | Upside: 8%
In the last couple of days, a lot of beaten-down NBFC stocks saw a smart up-move and Bajaj Finserv was no different.
After the March month's substantial drop, this marquee name went into a consolidation mode, which can be termed as a base-building process.
On Friday, the stock prices finally managed to surpass the multiple resistance zone around Rs 5,500-5,550, which eventually confirmed a ‘Bullish Flag’ pattern.
Most importantly, this move is backed by humongous volumes, providing credibility to the surge.
The way charts are shaped up, we expect the stock to participate heavily in the next leg of the rally. Thus, we recommend going long on a decline around Rs 5,800-5,750 for a positional target of Rs 6,200-6,400 in the coming days.
Firstsource Solutions (FSL) | Buy | LTP: Rs 39.95 | Target price: Rs 44 | Stop loss: Rs 38 | Upside: 10%
After facing resistance around Rs 39.90 twice in the last two months, the stock prices have finally broken above the key resistance confirming a ‘Cup N Handle’ bullish breakout.
The recent leg of strong up-move is also supported by strong volumes and it also resembles a strong continuation pattern known as ‘Flag’.
In addition, prices have also closed above 200-SMA which previously acted as resistance and now indicates a change in polarity.
Momentum oscillator RSI is in the positive zone, supporting our bullish stance. Thus, one can look to buy this stock on minor dips.
(The author is Chief Technical & Derivatives Analyst at 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.