Nifty slipped below the psychologically important level of 15,000 last Friday, snapping the weekly winning streak.
For the majority of last week, the market experienced pressure at higher levels and this is what we have been alluding to in our intra-week commentaries.
Technically, last week’s high precisely coincided around the crucial resistance zone of 15,380–15,500, which is the 161 percent ‘golden ratio’ of the entire fall from January 2020 highs to March 2020 lows.
Some sort of pause around it was quite evident. Although the market has come off a bit in the last three sessions, structurally, there is no major damage done on the charts.
It should merely be considered as profit-booking as of now. Going ahead, we need to keep a close eye on how Nifty behaves around its key support zone of 14,750–14,550.
Only a sustainable breach of these crucial levels should be considered as a short-term trend reversal.
On the flip side, 15,100–15,200 would be seen as immediate hurdles and any bounce towards this is most likely to get sold into.
Last week, some of the larger private banking names cooled off a bit after a recent marathon rally. The broader market, too, saw some profit-booking towards the fag end.
The real action was seen in some of the smaller PSU banking stocks as well as a few underperforming marquee PSU counters from the energy space.
This week is likely to be action-packed because the market is placed interestingly going into the monthly expiry.
Traders are advised to stay light and should avoid aggressive bets on the long side.
Here's one buy and two sell calls for this week:
Petronet LNG | Buy | LTP: Rs 253.30 | Target price: Rs 265 | Stop loss: Rs 246 | Upside: 5%
This stock has been in consolidation mode for the last few years. During this phase, the buying trends emerged whenever the stock reached its lower end, whereas the profit-booking started around the resistance zone.
If we take a glance at the daily timeframe chart, we can see prices resting around the 200-SMA for a while now.
In the last couple of sessions, the stock prices witnessed good traction and it is backed by more than average daily volumes.
Ashok Leyland | Sell | LTP: Rs 124.45 | Target price: Rs 114 | Stop loss: Rs 128.60 | Downside: 8%
This automobile stock had a spectacular run over the last few months and finally last Friday, we witnessed the first signs of profit-taking.
The stock prices slipped convincingly below the 20-day EMA for the first time in the recent past and in the process, the 200-day SMA on the hourly chart also got broken.
On the indicators front, we can see the RSI-smoothened oscillator is sloping downwards which is a sign of short-term weakness in the stock.
The last three months have been fabulous for this counter. Although it started participating late in the market bull-run, it had a good catch-up rally.
Recently, the stock prices slipped into a consolidation mode and with broader market correcting last Friday, this stock succumbed to the selling.
In the process, the daily charts exhibited a ‘range breakdown’ from the multiple time-tested support of Rs 1,230 on the closing basis.
The momentum oscillator reading too indicates extended profit-booking in the stock.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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