After a brief pause, last Friday the bears came back into the action to confirm a weekly close tad below the 17,000 mark. This had already dented the confidence of the bulls which eventually got validated when we saw massive gap down opening on Monday owing to nervousness across the globe. The bears went on to thrash recent swing low of 16,782.40 in opening trades to make their intention clear. Due to this aggrandized selling pressure, the benchmark index plunged towards 16,400 around the mid-session. Fortunately, a modest recovery in the latter half; pulled Nifty slightly higher to reclaim 16,600 at the close. Despite some recovery, the overall bias was strongly negative. But market surprised everyone in the following sessions by giving four back-to-back gap up opening to surpass few key hurdles. Our markets managed to recoup all losses in this course of action to eventually conclude the week tad above 17,000.
We have been continuously maintaining cautious stance from 18,000 plus levels. This certainly played out well as Nifty finally entered the projected target zone of 16,500 – 16,200. Although we were inclined towards more downside levels, we had to change stance a bit from Tuesday onwards. This was mainly due to some extreme oversold condition of individual stocks; we started looking for some positive stock specific trades. Nifty maintaining its position beyond 17,000 is an indication that the bears have lost their steam; because we not only surpassed the downside gap area created on Monday but also went on to negate the breakdown.
Now we are in a neutral zone from the bearish trend and if bulls have to regain the strength, 17,200 – 17,300 needs to be surpassed with some authority. This development will confirm the completion of recent corrective phase and the bulls would probably be back at a driver’s seat thereafter.
If this has to happen, the banking needs to step up which is slightly lagging behind in the recovery. Till then we are still not completely out of the woods. Let's see how things pan out going ahead as we are inching closer to the calendar year end. Traders are advised to stick to the stock centric approach because the real action lies there and we expect it to continue in coming session as well.
Here are two buy calls for next week:
Cipla: Buy | LTP: Rs 908.30 | Stop-Loss: Rs 874 | Target: Rs 968 | Return: 6.6 percent
It's been an excellent week for selective pharma names and Cipla is certainly among the leaders. It is showing some early signs of reversal around the cluster of key moving averages.
The base building followed by some notable uptick in prices indicates possibility of short term rally in the counter.
Since the prices are on the verge of confirming a breakout on daily time frame chart, we recommend buying it for a trading target of Rs 968. The stop loss can be placed at Rs 874.
Coforge: Buy | LTP: Rs 5,645.60 | Stop-Loss: Rs 5,540 | Target: Rs 5,790 | Return: 2.55 percent
The entire IT space has been the real helping hand for markets last week in difficult times. It's not only the heavyweight names who led from the front but also some of the mid-sized marquee names did perform well in the latter half of the week.
Coforge has been quiet all this while but on Friday, the late surge in the counter led to a breakout from the consolidation range.
If we look at the volume activity, it looks decent and hence, traders can look to buy for a near term target of Rs 5,790. The stop- loss can be placed at Rs 5,540.
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