It was an impressive week for the markets as the Nifty continued its upward trajectory, effortlessly reaching new milestones. A bullish momentum persisted throughout the week ended December 8, culminating in substantial gains of 3.46 percent to finish a tad below the 21,000 mark.
The winning streak extended for the sixth straight week, witnessing a swift in rally from the November swing lows of 19,000 to the recent levels of 21,000. The vertical ascent and uncharted price territory underscore the market's secular up-trend. Despite a slowdown in momentum over the last three sessions, minor dips are consistently met with buying interest, leading week-ending prices near the peak. Seeing the last three candles, prices seem to have entered a time-wise correction.
In the current week, 20,850 is seen as an immediate support, and sustained trading below this level could trigger a price correction, potentially bringing prices toward the next support at 20,700. The primary support zone remains the bullish gap created last week, ranging from 20,500 to 20,300, and as long as it holds, the secular bull run is expected to persist and any type of correction would be considered healthy for primary uptrend.
On the other hand, identifying key resistance is challenging in uncharted territory, but the 21,100 level, representing a reciprocal golden (161.8 percent) retracement of the recent fall, holds technical significance.
Traders are encouraged to consider some profit-taking around these levels. While momentum indicators signal overbought conditions, the strong trend indicates inherent strength. However, caution is advised, and traders should manage the risk effectively, rather than taking aggressive positions. Monitoring the specified levels is crucial for strategic trade placement.
Here is one buy call and one bearish call for short term:
IRCTC: Buy | LTP: Rs 749.55 | Stop-Loss: Rs 708 | Target: Rs 818 | Return: 9 percent
Most of the railway related stocks literally zoomed in the last few months; but Indian Railway Catering and Tourism Corporation (IRCTC) disappointed market participants by not participating in the bull run. Looking at the last 3-4 week’s price action, the stock is showing some promising signs to come out of the long slumber phase.
The daily chart depicts an ‘Inverse Head and Shoulder’ pattern which got confirmed after breaking out from the neckline level of Rs 720. Importantly, the recent move is backed by robust volumes which is the primary requirement to unfold this configuration.
We recommend buying this stock for a trading target of Rs 818. The stop-loss can be placed at Rs 708.
Mahindra & Mahindra: Sell | LTP: Rs 1,668.55 | Stop-Loss: Rs 1,692 | Target: Rs 1,625 | Return: 2.6 percent
The entire auto space is on a roll since the beginning of the post covid rally. Undoubtedly, the overall undertone remains strongly bullish, but we are seeing some signs of exhaustion at higher levels. On the weekly time frame chart, the ‘Doji’ candle is clearly visible, indicating uncertainty among market participants.
On the smaller degree chart, prices have sneaked below 5-day EMA (exponential moving average, which indicates the possibility of a further profit booking in the coming week.
Taking all these evidences in mind, traders can look to short for a near-term target of Rs 1,625. The strict stop-loss needs to be placed at Rs 1,692.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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