Last week, we witnessed swings on both sides as the market clearly looked clueless.
Importantly, the overall trading range has shrunk drastically, which is a sign of consolidation. A similar sort of action was seen across the globe as well and hence, with a lack of major triggers, Nifty, eventually concluded the week with more than a percent cut.
Clearly, the market is trapped in a slender range and last week it vacillated within 450-500 points, which is well below its recent average.
Of course, India VIX which was at 12-year high towards the end of March has cooled off considerably to enter sub-40 mark.
If we observe the daily chart, Nifty is gyrating within the boundaries of a ‘rising wedge’ pattern and we are approaching the ‘apex’ point now.
So theoretically, we are likely to see a breakout happening soon (probably in the next 2-3 sessions) from the consolidation.
As of now, we are hoping for the breakout to happen in the upward direction (above 9400), which would then propel the rally towards 9,500-9,700 levels.
However, this is just an assumption as of now and hence, if Nifty breaks lower before surpassing the upper boundary, traders should exit longs and then get ready for some correction in the market.
Therefore, 9,400 on the higher side and 8,900 on the lower side are the levels to watch out for. At present, it’s advisable to keep a note of the above-mentioned scenarios and should ideally adopt a stock-centric approach.
Here are two stock recommendations for the next 3-4 weeks:
Lupin | Buy | LTP: Rs 880 | Target price: Rs 940-960 | Stop loss: Rs 819 | Upside: 9%
The entire pharma space had been underperforming since 2015 and after a long time, the tide finally seems to have turned upwards.
April month has been a remarkable one for this sector and we have seen stocks soaring to a great extent after a long time.
If we look at the monthly chart of Nifty Pharma, we can see breakout happening from a multi-year ‘downward sloping channel’ that too, from a key 61.8 percent retracement of the previous gigantic up-move.
Lupin, one of the marquee names from this basket, had a colossal rally of almost 50 percent in this month so far.
With such a giant leap, this stock clearly becomes the preferred bet and adding to this, on Friday, we witnessed a bullish flag breakout on daily chart.
Thus, we recommend going long on a decline towards Rs 865 for a positional target of Rs 940-960 in the coming days. The stop loss can be placed at Rs 819.
Hero MotoCorp | Buy | LTP: Rs 1,890.45 | Target price: Rs 1,990 | Stop loss: Rs 1,830 | Upside: 5%
The auto sector has undergone tremendous stress over the past few months and now it has been on and off for the last few days.
Two-wheeler auto stocks have seen some steady move over the last couple of weeks and on Friday, despite broader markets being under pressure, Hero MotoCorp was clearly bucking the trend.
Although the stock has come off a bit from the intraday high, the daily chart still looks a bit positive.
The RSI-smoothened on daily chart is still pointing upwards and hence the stock can be bought for a target of 1990 over the next few sessions.
(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.