The smart rally in Nifty on January 8 was mainly triggered by global optimism. It has been one of the biggest as well as the longest relentless rallies in the history of Indian markets.
Those who missed the bus are completely furious and at the same time, the set of contrarian traders also must have gone for a toss.
As a momentum trader, such rallies become extremely difficult to trade, because whenever the short-term tide reverses, it will catch a lot of complacent traders on the wrong foot.
Nobody knows when it’s going to happen and till the time we do not see any major reversal signs, better to be with the flow by following strict money as well as risk management.
As far as levels are concerned, we are in uncharted territory and hence, it’s better to go one step at a time.
For this week, the immediate levels can be seen around 14,400-14,550, whereas on the lower side, the cluster of supports can be seen at 14,300-14,150-14,000.
The first sign of real weakness would come only below 14,000-13,900.
At present, the ideal strategy for traders would be to focus on individual stocks by following a strict exit strategy.
We would also advocate booking partial profits in this rally and avoiding aggressive leveraged positions.
Here are two buy calls for the next 2-3 weeks:
PSU stocks have been in the limelight for the last few weeks and this one of the divestment candidates has given a smart move of more than 20 percent after testing previous supports around Rs 350 – 360.
In the week gone by, this stock managed to traverse its stiff hurdle of Rs 420 with some authority.
If we look at the volume activity in this price action, we can see more than twice its average daily volumes to provide credence to the move.
In addition, the RSI-smoothened oscillator has crossed the 70 mark and is pointing northwards, which may provide impetus to the move.
We recommend going long on a decline towards Rs 435.
BHEL | LTP: Rs 39.35 | Target price: Rs 45 | Stop loss: Rs 35.90 | Upside: 14%
This one of the Navratna companies has been a sheer underperformer throughout this decade.
From its all-time highs, the stock prices kept sinking after the year 2010. Now, we have been observing some interesting price and volume activity in this stock for the last 3–4 months.
Although it’s still difficult to say whether the stock has enough potential to reach even half of its record highs, the possibility of some decent move in coming weeks cannot be ruled out.
We continue to maintain a positive stance on the stock and advice traders going long on any dip for targets of Rs 42-45 in the coming weeks.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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