Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One
Globally, most of the markets have been doing well since last few days and Monday morning, too, there have been favourable cues from the peers. We kick-started the week on a positive note as indicated by the SGX Nifty tad above 17,600.
During the first half, we witnessed some consolidation with hints of profit-booking. However, the selling aggravated as we stepped into the second half and as a result of this, markets came off sharply to eventually close below the 17,400 mark by shedding nearly eight-tenths of a percent from the previous close. This was followed by some consolidation in a small range for a couple of days. However, things worsened towards the latter half of the week to resume the recent downward trend. Eventually, the Nifty ended the week below 17,000 with a sharp cut.
On Monday, the reversal came precisely after nearing the sturdy wall of 17,600-17,700. So, if we look at it in the hindsight, we must accept the fact that the market is respecting the levels precisely. Now the way the market tumbled on Friday, recent swing low around 16,800 is in jeopardy now.
We will not be surprised to see it happening to test the 16,500-16,200 zone. Next couple of sessions would be quite crucial and if any recovery has to happen, this is the best possible zone from where it should happen.
All eyes are on the banking space because the way it's placed, it is likely to dictate the short-term trend.
Barring IT which was the sole outperformer, all other sectors succumbed to the selling pressure. The broader markets, too, took it on the chin. And hence, traders are advised to stay light on positions and even if the market attempts to recover, one should avoid aggressive longs till the time 17,700 is not surpassed. Before this, 17,100-17,200 are to be considered as immediate hurdles.
Here is one buy call and one sell call for near term:
Wipro: Buy | LTP: Rs 670.80 | Stop-Loss: Rs 649 | Target: Rs 692 | Return: 3.2 percent
The IT space was bucking the trend on Friday when the entire market was undergoing a sharp correction. Wipro was certainly among the top performers as compared to some of its mid-cap peers.
Price wise, we see a decisive breakout in the stock after consolidating for several weeks around the cluster of key moving averages.
If we look at the volume activity, it has risen substantially, providing credence to this up move. Now since the stock has already moved a bit, we recommend buying it around Rs 664 for a trading target of Rs 692. The stop loss can be placed at Rs 649.
M&M Financial Services: Sell | LTP: Rs 150.10 | Stop-Loss: Rs 157 | Target: Rs 144 | Return: (-4.1) percent
A lot of NBFC stocks have gone under the hammer in the recent past and this is one of them. Overall, if we see, this stock has always failed to live up to its expectations as it never gave decent returns to its buyers.
Recently, when markets took a U-turn from its record highs, this stock was among the first ones to correct. On Friday, the stock witnessed yet another breakdown in the counter and looking at the weekly time frame chart, we expect this weakness to continue for a while. Traders can look to sell on a rise around Rs 154 for a near-term target of Rs 144. The stop loss can be placed at Rs 157.
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