On July 15, the markets closed on a promising note by reclaiming the psychological junction of 16,000 and global markets did not disappoint this time. The global screen was excellent at the start of the week ended July 22 as sentiments improved drastically over the weekend. As a result, we had a decent bump at the opening on Monday (July 18) which kept on accelerating as the week progressed. In this course of action, the Nifty even went on to surpass the sturdy wall of 16,350 – 16,430 with a ‘Breakaway Gap’, which is a reflection of strong optimism in the market participants.
Although we had some muted move around the mid-week, the Nifty eventually continued its northward move to conclude the week above 16,700 by gaining over 4 percent on a week-on-week basis.
Last three months have been stressful for financial markets across the globe but the week gone by, things have improved drastically on a macro level. In fact, markets were already showing some resilience in past weeks, and it had all the ingredients to move higher. But sulking US bourses were not letting our domestic markets to initiate the relief rally.
Finally, the much-needed impetus was provided throughout last week which resulted in a smart rally in our markets. If we refer to our recent commentary, last week's up move has certainly validated our recent bullish stance on the market and the ‘buy on declines’ strategy seem to have worked well in our favour.
Now, going ahead, Wednesday's gap area of 16,360 – 16,490 is to be seen as a sacrosanct support and any decline towards the mentioned support is likely to get bought into. On the higher side, recent swing high of 16,793 is very much within a touching distance now and soon we would expect benchmark index surpassing this as well. Slowly but steadily, we would see it eyeing its '200-SMA' (simple moving average) zone of 16,900 – 17,050 which would certainly be a sigh of relief for market participants.
In our sense, the index specific move may not be that fascinating now from traders' point of view and hence it's better to stick to stock centric approach in the forthcoming session as well.
A lot of thematic moves started doing well last week and hence, the pragmatic approach would be to focus on such potential movers which are likely to provide better trading opportunities.
To sum it up, although the undertone remains bullish, it's important to understand that the low hanging fruit is already gone and hence, it's advisable not to become too complacent; rather better to take one step at a time for a while.
Here are two buy calls for next 2-3 weeks:
Rain Industries: Buy | LTP: Rs 161.60 | Stop-Loss: Rs 154.4 | Target: Rs 175 | Return: 8 percent
This stock has been a laggard for many months now and it's clearly visible if we look at the YTD (year-to-date) performance of the counter. However recently, the declining trend came to halt after reaching its '200-SMA' zone on weekly time frame.
On last Friday, the entire cement pack was on a roll and this stock was quick to react to some of its larger peers. With a decent price and volume activity, we witnessed first sign of reversal after confirming the ‘Higher Top Higher Bottom’ on smaller degree chart.
If we combine short as well as medium term price structure, we expect some sustainable relief move in the counter in coming days.
Hence, we recommend buying for a near term target of Rs 175. Traders can participate by following strict stop-loss at Rs 154.40.
Balaji Amines: Buy | LTP: Rs 3,319.60 | Stop-Loss: Rs 3,212 | Target: Rs 3,455 | Return: 4 percent
Some of the popular chemical stocks made a strong comeback last week, especially in the latter half. Balaji Amines was one of the rank outperformers underwent a massive price wise as well as time wise correction in last eight odd months.
Recently, we witnessed a good consolidation in stock prices which after Friday's massive price surge becomes a short-term base around its key multi-month supports.
On the daily chart, it has confirmed a decisive breakout with gargantuan volumes and in the process, we can even see it traversing the '200-SMA' placed around Rs 3,200.Traders are advised to buy on a decline towards Rs 3,300 - Rs 3,280 for a near term target of Rs 3,455. The strict stop-loss needs to be placed at Rs 3,212.
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