Sameet Chavan, Chief Analyst-Technical and Derivatives, at Angel One
Last Monday's session started on a nervous note as global sentiments remained weak over the weekend. The index performed within a range throughout the first half and, despite some challenges, the Nifty managed to hold 16,000 on a closing basis. However, the banking finally succumbed to the sell off, leading the Nifty below the psychological point to mark lowest close in last 10 months last Thursday.
On Friday, we started off significantly higher on the back of global relief; but once again our market failed to sustain at higher levels and eventually erased all gains in the latter half. With this, Nifty once again lost nearly 4 percent on a weekly basis.
The global macro factors have weighed down heavily on financial markets across the globe and we are certainly not spared with it. The oversold market is in a denial mode to give small recovery, in fact, last Friday's rebound got completely sold into towards the fag end. This certainly does not augur well for the bulls.
The recent low of 15,671 is not far from current levels now and the moment we slide below it, it will create a panic kind of situation in the market. Below this, 15,350 - 15,200 are the next levels to watch out for.
On the flipside, 16,000 - 16,200 has now become a stiff hurdle. First sign of relief is possible only above these levels. Till this time, one should avoid trading aggressively in the market.
If we take glance at the weekly time frame chart, we can see sheet anchor in the form of '89-EMA' (exponential moving average) placed around 15,600. Historically, this moving average has proved it's mettle and has provided cushion to severe falls. It would be very interesting to see how market behaves around it.
Hence, although the trend is strongly bearish at this moment, we advise investors with a slightly broader time frame, should start nibbling in quality propositions in a staggered manner. Also, since the global factors are driving the markets completely, traders should keep a close tab on all these developments.
Here is one buy call and one sell call for short term:
Indraprastha Gas: Buy | LTP: Rs 372.65 | Stop-Loss: Rs 358 | Target: Rs 398 | Return: 7 percent
Most of the gas distribution companies underwent a massive price correction over the past few months and in this process, IGL plummeted more than 40 percent in a span of nine months.
However, the fall seems to have arrested now as stock prices recently did not participate in the broader market sell off and in fact, despite a challenging session on Friday, this stock ended the session firmly in the green. Price-wise, we can witness a decisive breakout along with substantial rise in volumes.
Hence, we recommend buying this stock for a trading target of Rs 398. The stop-loss can be placed at Rs 358.
Bharti Airtel: Sell | LTP: Rs 689.90 | Stop-Loss: Rs 714 | Target: Rs 664 | Return: 4 percent
Since last few months, this stock was neither moving higher nor correcting. So, it was more of a consolidation phase for this telecom giant. But on last Friday, the stock seemed to have surrendered to the sell off and has slipped below the ‘200-day SMA’ (simple moving average), which has been acting as a sheet anchor on numerous occasions historically.
But the way it closed on last Friday, things do not look good for the counter and this time, it may extend its correction phase below this sacrosanct moving average.
Thus, we recommend selling on a minor bounce towards Rs 694 – 697 for a near term target of Rs 664. The strict stop-loss needs to be placed at Rs 714.
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