We had a soft opening of the weekly trading session on July 25 on the back of sluggish global cues. With some tiny swings on both sides, the index eventually settled around opening levels on the same day. This was followed by yet another weak session and in the process, Nifty sneaked below the key level of 16,500.
Fortunately, the table turned completely on Wednesday as we witnessed a strong buying emerging at lower levels to reclaim some important levels ahead of the Fed policy as well as monthly expiry. The Fed chairman didn't disappoint this time by delivering the expected outcome of 75 bps rate hike and to add cherry on top, the commentary was very much on the dovish side. This development lifted the overall sentiments on the expiry session as we not only witnessed a gap up opening but also extended the move during the remaining part of the week ended July 29.
The action-packed week concluded on a strong note and importantly above the psychological mark of 17,000 with some authority. This level coincides with the '200-SMA' (simple moving average) and hence, should be considered as a key development from a technical point of view.
Also, with this, we are now trading at 3-month high which is an encouraging sign for the bulls. It has been a trend deciding week for our market and since we have concluded the July month as well, we are left with lot of promise for the August month.
In last couple of sessions, we witnessed back-to-back gaps which can be termed as 'Breakaway Gap and 'Runaway Gap', respectively. This is a sign of a strong momentum and hence, till the time we do not see today's gap area of 17,018 – 16,948 being challenged or filled, we may not see a loss of momentum soon.
Just to elaborate, here the loss of momentum stands for overall buzz we are seeing in individual pockets and not the actual benchmark index.
As far as Nifty is concerned, we may see some consolidation going ahead, but undertone in the broader market would continue to remain strong. For the coming week, 17,380 followed by 17,450 are the immediate levels to watch out for.
Although globally we are seeing some relief, we advise traders not to get too complacent. It's advisable to keep booking timely profits on existing positions at higher levels and the churning within the potential movers remain the key.
The Nifty Midcap50 index too traversed through its '200-SMA' and the way some of the midcap counters performed last week, one should look to identify stocks from the cash segments as well.
Here are two buy calls for next 2-3 weeks:
Finolex Cables: Buy | LTP: Rs 424.55 | Stop-Loss: Rs 404 | Target: Rs 460 | Return: 8 percent
Throughout this year, this stock has been sulking as we witnessed nearly 50 percent retracement of the previous up move to test the Rs 350 mark. Fortunately, the corrective phase ended there and after a brief consolidation, the stock prices started moving upwards.
The stock finally seems to have found its mojo back as we witnessed a decisive price and volume breakout on Friday from the hurdle of 417.
Technically, the recent price configuration can be termed as a 'Bullish Flag' breakout. Hence, we recommend buying for a near term target of Rs 460. Traders can participate by following strict stop-loss at Rs 404.
National Aluminium Company: Buy | LTP: Rs 77.80 | Stop-Loss: Rs 73 | Target: Rs 85 | Return: 9 percent
The Metal has been the worst performing sector since mid-April. Finally with global sentiments improving, we are seeing some relief in this space as well. Last week, Nifty Metal index clocked nearly 8 percent gains, which by far was the best week in recent months.
As far as ‘NALCO’ is concerned, it was slow to react and did not move in tandem with some of its larger peers. But considering the Friday's price action, we expect the stock to give some catch up move in the coming week.
Traders are advised to buy for a near term target of Rs 85. The strict stop-loss needs to be placed at Rs 73.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.