Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One
We started the proceedings last Monday on a positive note despite sluggish global cues. In an initial hour, the gains extended to move towards 16,000 mark. Similar to recent trends, the profit-booking took place at higher levels to erase all gains around the midsession. Although the market recovered slightly thereafter, the overall movement was quite choppy to conclude the day around 15,850, with nearly four-tenths of a percent gains.
This was followed by a massive relief move last Tuesday, which extended towards 16,400 on the subsequent day. However, the global weakness struck back once again on the weekly expiry session with a huge gap-down to retest 15,800. The market was not done with its twists as Friday's session opened with yet another gap; but this time it was fortunately on the higher side. This pleasant surprise picked up its momentum as the day progressed, to conclude the week convincingly above 16,200 mark.
The second half of the week gone by was full of dramatic twists and turns. Both the counterparties were caught napping in all this but, as we mostly say ‘all's well that ends well’, eventually the bulls turned out to be victorious as they managed to pull the Nifty back inside the safe terrain by gaining over 3 percent from previous week's close.
With reference to previous week's commentary, 15,700 – 15,600 stands to be a very solid support; because it coincides with the '89-EMA' (exponential moving average - 15,658) on weekly chart who has proved its mettle many times over the past many years. Yes we are not completely out of the woods but at least we are well above the crucial support zone.
On the flipside, the cluster of resistance is placed around 16,400 – 16,500 – 16,600 and till the time we do not surpass it convincingly, one should avoid being complacent. At this juncture, we are clearly mirroring US markets' sentiments and hence, if market has to move higher, the global relief is the key.
Let's see how things pan out this week. It would be important to keep a regular tab on global developments and one should certainly be prepared for surprising moves on either side. As far as sectoral participation is concerned, we witnessed some decent relief moves in most of the beaten heavyweight spaces this week.
Also, the broader market has started to show some encouraging signs which, we believe, should do extremely well if the market remains above the psychological support of 16,000.
Here are two buy calls for short term:
Petronet LNG: Buy | LTP: Rs 227.95 | Stop-Loss: Rs 217.80 | Target: Rs 245 | Return: 7.5 percent
If we take a glance at the price action for last ten odd months, we can clearly see rangebound movement with slightly negative bias. Stock prices continued with its lower lows lower highs configuration all this while and has faced tremendous resistance around the sturdy wall of '200-day SMA'.
Of late, we witnessed lot of changes structurally as prices managed to turn the tide upwards by confirming 'Higher Highs Higher Lows' and importantly, has managed to finally traverse the '200-SMA' with some authority.
There are no exceptional volumes as such, but are certainly much higher than its previous average daily volumes, which provides credence to the move. Hence, we recommend buying this stock for a trading target of Rs 245. The stop-loss can be placed at Rs 217.80.
Axis Bank: Buy | LTP: Rs 673.10 | Stop-Loss: Rs 657 | Target: Rs 700 | Return: 4 percent
Overall financial space has been one of the worst performing spaces in last couple of months and 'Axis Bank' has certainly contributed in it to the fullest. After witnessing a 20 percent price correction from recent highs, the stock prices finally saw some respite around the multi-month supports of Rs 640 – 630.
On last Friday, we could see first sign of strength after sustaining beyond the '5-day EMA' along with positive crossover in 'RSI-Smoothened' oscillator from its deeply oversold territory.
Hence, if global market remains stable, this stock is likely to give decent relief rally in the coming week. We recommend buying for a near term target of Rs 700. The strict stop-loss needs to be placed at Rs 657.
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