Market started the week gone by on a sluggish note on February 21 as uncertainty with respect to Russia and Ukraine was still looming large. Due to this tentativeness, the volatility increased a bit and Nifty kept flirting with the key support zone of 17,000–16,800 for nearly three sessions.
However, on Thursday, Russia finally invaded its neighboring country, Ukraine, which had a complete outburst of fear across the global financial markets. We were certainly not spared of it and as a result, the Nifty first opened with a massive cut and as the day progressed, the sell-off aggrandized to thrash all immediate supports one after another. Before anyone could realize, Nifty slid to 16,200 which was the lowest level in last seven months.
Things looked extremely bleak at one point but fortunately globally there was some relief and hence our market, too, had a sharp recovery on Friday to recoup some portion of losses. Despite this, Nifty ended the week below 16,700 with a cut of over three and half a percent to the previous weekly close.
Taking a glance at the daily time frame chart, we can clearly see Nifty breaking below the sacrosanct moving average of '200-SMA' (simple moving average) placed around 16,900. Since this has happened with a 'Breakaway Gap', traders would continue to have challenging times till the time we do not reclaim 16,800 – 17,000 with some authority. This is possible in the near term only if tensions ease off with respect to Russia and Ukraine. Till the time this does not happen, we are not completely out of the woods.
On the flipside, 16,400 followed by 16,200 are to be seen as immediate supports but if things worsen from here, we will not be surprised to see Nifty sliding below 16,000 as well.
Let's see how things pan out going ahead and since the volatility is likely to remain on the higher side, traders are advised not to get carried away by one day bounce. Rather it's advisable to keep a regular tab on all these developments and better to stay light on positions. Whether market extends the correction in sub-16,000 terrain or not, the time will tell; but in case if it happens, it would certainly be an excellent opportunity for investors to accumulate quality propositions in a staggered manner.
Here is one buy call and one sell recommendation for this week:
Piramal Enterprises: Buy | LTP: Rs 2,062.35 | Stop-Loss: Rs 1,995 | Target: Rs 2,160 | Return: 4.7 percent
This stock has undergone a massive price correction in the recent months. If we take a glance at the weekly time frame chart, we can see prices reaching an interesting point. Firstly, the '200-SMA' on weekly chart is placed around this week's low which coincides with the previous breakout from where the gigantic rally started in June 2021.
Although, the overall uncertainty of the global concerns is not completely behind us, we recommend buying this stock with a strict stop-loss. One can look to buy as a trading punt for a target of Rs 2,160. The stop-loss can be placed at Rs 1,995.
Tata Motors: Sell | LTP: Rs 459.75 | Stop-Loss: Rs 471 | Target: Rs 442 | Return: 3.86 percent
This stock was among the most active counters in last couple of trading sessions. On Thursday, along with broader market destruction, we witnessed a massive cut of nearly 10 percent and on the following day, the stock prices recovered sharply by 8 percent on the back of global relief.
Looking at the daily chart, previous support zone of Rs 460 – 465 is likely to be seen as a sturdy wall and in case of some nervousness in global markets, we would see this stock correcting again.
However, having said that, considering the recent volatility we advise shorting as a trading punt, and one should follow strict stop- loss for this trade. We recommend shorting this stock for a near term target of Rs 442. The stop-loss can be placed at Rs 471.
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