The market was off to a quiet start on June 20 after the hammering of the previous week but resumed the downtrend immediately, with the Nifty sliding towards the low of 15,200.
Positive global cues lifted sentiment the next day and the market had a decent relief rally in which it retested 15,700. Some tremors were felt mid-week but the Nifty held on to key support levels. A good broad-based participation saw the Nifty at around 15,700.
The index is back at 15,700, the recent breakdown point, hence, the market has entered a corridor of uncertainty. Till the time Nifty does not go past its major hurdle of 15,900–16,000 on a closing basis, one should avoid aggressive bets on the long side.
It will be interesting to see how the market behaves in the first half of the week. If global relief extends, we may see the Nifty surpass the 16,000-mark, which will trigger a sharp short-covering rally. There is a cluster of resistance at 15,800–15,900–16,000.
On the flip side, the immediate supports are placed at 15,500, 15,350 and 15,200.
If Nifty manages to close above 16,100 during the week, it will confirm its quarterly close above “5-EMA (exponential moving average)”. Whenever the Nifty has closed below this key average on the quarterly chart, it has led to a sizeable correction.
The last time it happened was in the initial phase of Covid and before it, in 2011. Looking at the broad-based relief this week, we remain hopeful of the market sticking to history.
Here are two buy calls for the next two-three weeks:
Shriram Transport Finance Corporation: Buy | LTP: Rs 1,245.30 | Stop-Loss: Rs 1,158 | Target: Rs 1,365 | Return: 10 percent
Since the early part of the current calendar year, stock prices have been vacillating within the boundaries of a “triangle” pattern on the daily chart. As it underwent a correction way before the market started correcting, it did not see damage in the recent selloff.
With the market showing early signs of relief, this counter has already taken a lead, as prices zoomed this week to confirm a breakout from this multi-month price configuration.
Since the price development is backed by higher volumes, we expect the rally to extend this week. We recommend buying this stock at around Rs 1,235–1,225 for a trading target of Rs 1,365. The stop-loss can be placed at Rs 1,158.
Coforge: Buy | LTP: Rs 3,647.35 | Stop-Loss: Rs 3,493 | Target: Rs 3,920 | Return: 7.5 percent
If we consider March 2020 (coronavirus) fall as an exception, the recent price decline in IT space has been a brutal one, something not seen in more than a decade. Now with the Nifty IT correcting more than 30 percent from record highs, we can see many constituents entering extreme oversold terrain.
At this juncture, Coforge is positioned very interestingly. It has completed 50 percent retracement of the larger up move and we are seeing some trend reversal patterns around the strong support zone.
Looking at the daily and weekly time frame charts, we expect some relief in the counter in the coming week. We recommend buying on a decline for a near-term target of Rs 3,920. A strict stop-loss needs to be placed at Rs 3,493.
Disclaimer: The views and tips expressed by investment 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.
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