We had a soft start to the new trading week on last Monday as indicated by sluggish global peers. Barring an initial hour, Nifty remained under pressure for the remaining part of the session as it kept grinding slowly and steadily. Due to lack of buying interest, the Nifty eventually ended the session with nearly a percent cut tad above the 17,100 mark.
This was followed by a V-shaped recovery on the following day to reclaim the 17,300 mark. However, post the gap-up opening on Wednesday, markets (key indices) started becoming a bit nervous and a similar boredom was witnessed throughout the latter half to conclude the last week with less than a percent cut tad above the 17,150 mark.
In the previous couple of weeks, our markets have already weathered the storm and managed to give a remarkable recovery of nearly 10 percent in such a short span. So some sort of respite was very much on cards and this is what we had mentioned in our previous weekly commentary that the market may not have the strength/pace that it had in the previous weeks.
Whenever market struggles around key levels, it generally happens in two scenarios. Firstly, when market is sensing some unpleasant event or when it gives a sharp upmove in a quick succession and needs some breather before resuming higher. Although we are not completely out of the woods if we take Russia-Ukraine tensions into consideration, chartically we cannot think of the first scenario at this moment.
Last week's price behaviour aptly suits with the second scenario which in technical terms can be described as a 'Time-wise Correction'. Let's see how things unfold and if there is no aberration globally, we are most likely to hold the sacrosanct support zone of 17,000 – 16,900.
The first half of the forthcoming week would certainly give us the fair idea of the short-term direction. Till then 17,350 – 17,450 are to be considered as immediate hurdles.
Last week, IT, Reliance Industries, Metal and to some extent pharma counters lent the helping hand but banking kept sulking in the latter half. Since the banking index has approached its key support zone, we hope it will take some charge from hereon.
Apart from this, the broader market did extremely well last week and we expect it to continue in the current week as well. Hence traders can look to identify such potential themes to fetch higher returns.
Here are two buy calls for next week:
Mindtree: Buy | LTP: Rs 4,281.35 | Stop-Loss: Rs 4,120 | Target: Rs 4,450 | Return: 4 percent
The IT space lent some helping hand this week and after heavyweights, the mid-size companies have started to show some strength. Mindtree has been consolidating for nearly three months after undergoing a decent price correction.
After spending a lot of time at the '200-day SMA' (simple moving average), the stock prices finally confirmed a breakout on last Thursday.
If we look at the volume activity, it has risen during the price surge. We recommend buying this stock for a trading target of Rs 4,450. The stop-loss can be placed at Rs 4,120.
Godrej Properties: Buy | LTP: Rs 1,622.95 | Stop-Loss: Rs 1,574 | Target: Rs 1,710 | Return: 5.4 percent
This stock had a dream run last year during the period of August to October. Post this, the entire realty space underwent a stressful phase, and, in the process, stock prices corrected nearly 50 percent from the recent top. This price correction finally arrested around its cluster of supports.
Now on the daily time frame charts, the stock prices have taken a U-turn, showing early signs of reversal. Traders can look to buy for a near term target of Rs 1,710. The stop-loss can be placed at Rs 1,574.
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