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The second week of the new calendar year started on a good note at a fresh record high, a tad below the 14,500 mark last Monday.
Last Friday, there was some profit-booking and the Nifty ended the week below Monday’s opening point.
The bulls are continuing with their stronghold on the market and barring a single day of sharp correction last month, the relentless rally resumed to clock fresh record highs day by day.
In our intra-week commentary, we had mentioned how the '2.30' factor played out well in the last few days. There was a typical pattern when we see some price decline in the first half and buying emerges in the latter half to hit new record highs.
But this winning streak finally got snapped on Friday when the market corrected further after 2-2.30 pm.
Although it is just a one-day activity and still no major damage done, we expect 14,650 to act as an immediate resistance now.
On the daily chart, Nifty closed below 5-day EMA for the first time in the recent past, which is the first sign of weakness.
Hence, this week, the extension of profit-booking cannot be ruled out. The moment we see Nifty sliding below 14,380, the index may slide towards 14,250-14,100 levels.
In terms of stocks, the fatigue was seen in so many counters from Wednesday itself.
The banking index is at its previous record highs and the Nifty Midcap 50 index, which is at the crucial Fibonacci ratios, may see much-awaited corrective moves.
Since the overall trend has been strongly bullish, even if the correction comes, one needs to go one at a time rather than projecting bigger downside targets.
Traders are advised to stay light and avoid aggressive leveraged positions.
Here's one buy and one sell call for the next 2-3 weeks:
Vodafone Idea | Buy | LTP: Rs 13.60 | Target price: Rs 20 | Stop loss: Rs 10.90
We mostly avoid such low ticket size counters because of their irregular behavior. But the kind of price and volume development we witnessed in this counter last week, this stock cannot be overlooked.
The stock broke out convincingly above its multi-month resistance with some authority to mark the highest close in the last 18 months.
If we look at the volume activity, it suggests tremendous buying interest in the stock.
On the monthly chart, the stock traversed 20-EMA which is supported by the RSI-smoothened oscillator which has crossed the 30 mark to come out of the bearish (oversold) territory after May 2018.
We recommend going long on a decline towards 13 for targets of Rs 18-20 in the coming weeks.
Indraprastha Gas (IGL) | Sell | LTP: Rs 548.85 | Target price: Rs 527 | Stop loss: Rs 576
All these gas distribution companies have given extraordinary moves since mid-October.
IGL has been one of the marquee PSU names, managed to clock whopping gains of nearly 55 percent in such a short span of time to register a fresh record high of Rs 581 last Thursday.
Unfortunately, it failed to sustain at higher levels as profit-booking pulled prices lower last Friday to enter the sub-550 territory.
On the daily chart, we can see a ‘Shooting Star’ pattern getting confirmed whereas, on the weekly time frame, the ‘Gravestone Doji’ has been formed.
Hence, although the broader degree trend remains strongly bullish, a short-term correction cannot be ruled out.
Traders can look to sell the stock on a bounce towards Rs 560-565.
(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.