Despite a promising close last Friday (April 8), our markets started the week on April 11 on a tepid note owing to sluggish global cues. On the same day, Nifty consolidated for the major part with the hint of some weakness to close below 17,700.
However, on the following day, we witnessed a decent gap down opening on the back of some nervousness seen across the global markets. Although the damage was restricted to a great extent, individual stocks saw decent profit booking all this while. A similar rangebound session was observed on April 13 when the truncated week ended with nearly 2 percent loss for Nifty, a tad below the 17,500 mark.
It was certainly a bit challenging week for our markets and obviously due to such long gap, market participants chose to take some money off the table and did not carry over aggressive trades.
Now if we take a glance at the daily time frame chart, we can see Nifty placed at a crucial juncture. Firstly, the sacrosanct support of '20-day' EMA (exponential moving average) is positioned at 17,450 which coincides with the breakout point of previous congestion zone. Hence till the time, Nifty is holding 17,400 – 17,200, we remain a bit hopeful of some recovery here.
We hope there is no aberration on global front in the coming days and any favourable cue would certainly be a cherry on the cake.
On the upside, 17,700 followed by 17,850 are the levels to watch out for. If Nifty has to regain any strength, it needs to surpass these barriers with some authority.
Let's see how things pan out and, in our sense, if benchmark has to move higher from here, the banks need to take the charge (which we are assuming on this occasion). The Bank Nifty is placed at its rock-solid support of 37,000 – 36,800. A move beyond 38,000 would provide the impetus for the next leg of the rally.
Apart from this, although broader market underwent some profit booking in last couple of days, we still expect the smaller names to outperform going forward.
Here are two buy calls for the current week:
Welspun Corp: Buy | LTP: Rs 211.70 | Stop-Loss: Rs 200 | Target: Rs 226 | Return: 6.75 percent
The stock has seen a significant up move in the past couple of trading weeks. In recent developments, the stock has retested the breakout zone and has witnessed a strong follow-up buying on the back of robust volumes.
In addition to the price action, the technical indicators have also strongly backed the momentum, wherein the MACD (moving average convergence divergence) has witnessed a positive crossover affirming the inherent strength in the counter.
Hence, we recommend buying this stock at Rs 210 for a trading target of Rs 226. The stop-loss can be placed at Rs 200.
Shipping Corporation of India: Buy | LTP: Rs 133.85 | Stop-Loss: Rs 129 | Target: Rs 140 | Return: 4.6 percent
Some of the shipping related stocks literally zoomed up during the first couple of sessions of the week and this stock remained unmoved all this while. But finally on Wednesday, the buying seemed to have emerged in this counter as it was clearly overdue to catch up with some of the other peers.
Technically, we can construe this as a bullish breakout along with huge volumes, indicating renewed buying interest in this PSU.
Considering the positive placement of some of the indicators, we recommend buying on a small decline for a near term target of Rs 140. The stop-loss can be placed at Rs 129.
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