Before the last Monday's sell-off, the market was trapped in a small range between 14,900 and 14,500. On April 12, Nifty breached this range in the downward direction and the major culprit of this was the entire financial basket.
Although Nifty didn’t violate major support of 14,200, Bank Nifty slipped below its support at 32,400 – 32,200. Hence, till the time we do not see the banking index crossing 32,500–33,000, we are certainly not out of the woods.
As far as Nifty is concerned, 14,700–14,850 remains a sturdy resistance and surpassing it would really be a daunting task for the bulls.
On the downside, 14,500–14,350–14,250 are the levels to watch out for.
If we have to take out any positives from the week gone by, it would certainly be an overall improvement in the market breadth which remained strongly in favour of advances.
Also, there were few pockets like IT and pharma that did exceedingly well towards the latter half of the week.
Meanwhile, the Nifty Midcap50 index has confirmed a lower top, lower bottom sequence on the daily chart along with the breakdown from head and shoulder pattern.
Hence, identifying the apt theme and the potential movers within the same would be a key thing.
In that sense, it’s better to stay light on positions and avoid aggressive longs until few key levels are not reclaimed convincingly.
Here is one buy and one sell call for the next 2-3 weeks:
Strides Pharma Science | Buy | LTP: Rs 919.50 | Target price: Rs 992 | Stop loss: Rs 872 | Upside: 8%
The pharma sector seems to have been in a different orbit for the last 12 months. Most counters from this space have completely compensated for the underperformance as well as boredom they had given for the previous 5 years.
Now the stocks are in a hurry as the recent time-wise and price-wise correction got bought into.
Strides Pharma failed to participate in the last few days’ rally, but on Friday, we finally witnessed a decisive price and volume breakout from the recent congestion zone.
We recommend going long around Rs 912–907 for a target of Rs 992 in the coming days.
Grasim Industries | Sell | LTP: Rs 1,347.05 | Target price: Rs 1,270 | Stop loss: Rs 1,402 | Downside: 6%
Generally, we do not associate this counter with the term sell because of its phenomenal run since the March 2020 lows.
The stock price has given three-fold return since then without even seeing a small phase of price correction.
Although the higher degree trend remains strongly bullish, we are now seeing some signs of decent short-term correction in the stock.
On the daily chart, we can see prices falling convincingly below 20-EMA along with the bearish crossover of short-term averages for the first time in the last few months.
(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.