As Nifty continues to hold above 11,250 levels we believe some more buying momentum can be seen in the mid-cap stocks, but one should book some profits in stocks which have moved 20-30 percent higher from their recent lows, said Rajesh Palviya, Head - Technical & Derivatives Analyst, Axis Securities
Q: Indian markets closed the truncated week on a positive note with gains of nearly 1 percent. How is the technical setup looking for the index? What are the crucial levels to watch out for next week which also has an F&O expiry?
A: The Nifty50 started the week with an upward gap and buying momentum was seen for the most part of the week. With a second truncated week, the index has extended its upward move registering new high at 11,620 levels.
On the weekly chart, the index has formed a small bullish candle carrying a small upper shadow indicating profit booking at higher levels.
The index is moving in a ‘Higher Top’ and ‘Higher Bottom’ formation on the daily and weekly charts indicating a sustained uptrend.
The chart pattern suggests that if Nifty crosses and sustains above 11,620, it would witness buying momentum which would lead towards 11,680-11,740 levels.
However, if the index breaks below 11,500 level in the coming week then it would witness more profit booking which would take Nifty towards 11,420-11,360.
The Nifty continues to remain in an uptrend in the medium-term, so buying on dips continues to be our preferred strategy.
For the week, we expect Nifty to trade in the range of 11,600-11,420 with mixed bias.
The weekly strength indicator RSI is moving upwards and is quoting above its reference line indicating a positive bias.
However, momentum oscillator, Stochastic, has turned negative from the overbought zone indicating a possible consolidation or a down move in the near-term.
The strength indicator RSI has turned downward along with negative divergence which signals a cautious view ahead.
Q: How is the rupee looking on technical charts which climbed back above Rs 70/$ again?
A: USDINR managed to hold above its bullish gap area Rs 69.50-69.20/$ and is consolidating above the same level for the second consecutive week which indicates sustained strength.
The chart pattern indicates that USDINR is likely to extend its upward move towards Rs 71-71.80 in the near/short-term.
On the lower side, 69.50-69.20 are likely to act as support for minor corrective action. Our preferred strategy would be to buy on dips till USDINR is trading above 69.20 levels.
If it breaks below Rs 69.20/$ then we may see more profit booking which could drag it lower towards Rs 68.80-68.50/$ level.
Q: Small & midcap stocks have picked up momentum not seen in earlier rallies. Do you think a recovery has begun in this space?
A: Small & Mid-cap stocks have shown accumulation and buying interest at lower levels. It has been seen in select quality midcap and small-cap stocks.
We believe stocks with good fundamentals backed by a good Q1FY19 would continue to rally as the benchmark index is in bullish zone.
The Mid-cap Index also managed to cross above the 100-DMA and 200-DMA level which indicates mid-cap index is gaining strength and we may see more bullishness to continue in the short-term.
As the benchmark index continues to hold above 11,250 levels then we believe that some more buying momentum can be seen in the mid-cap stocks.
However one should book some profits in stocks which are moved 20-30% higher from their recent lows.
Q: Top three-five stocks which investors can look at with a holding period of 1 month?
A: Here is a list of top three stocks which could give 5-8 percent.
Glenmark Pharma: Buy| LTP: Rs 661.50| Target: Rs 685-700| Stop Loss: Rs 625| Return 6-8 percent
On the weekly chart, the stock has formed an “Inverse Head & Shoulder" pattern - a short-term reversal pattern which signals a shift of short-term trend reversal to the upside.
This breakout is accompanied with a huge spurt in volumes which supports bullish sentiments ahead. The daily and weekly strength indicator RSI and the momentum indicator Stochastic both are in positive terrain which supports upside momentum to continue in the near-term.
The stock is well placed above its 20, 50 and 100-day SMA which supports bullish sentiments ahead. Investors can look at buying the stock in the range of Rs 650-638.
Cummins India: Buy| LTP: Rs 762.25| Target: Rs 790-805| Stop Loss: Rs 730| Return 6-8 percent
With current week's strong gains the stock has decisively broken out from its “Down Sloping channel” at Rs 705 levels on closing basis. This breakout is accompanied with a huge spurt in volumes which supports bullish sentiments ahead.
The weekly strength indicator RSI is moving upwards which supports bullish sentiments in near term. The stock is well placed above its 20, 50 and 100 day SMA which supports bullish sentiments ahead. The buying range is Rs 750-736.
RBL Bank: Buy| LTP: Rs 611.20| Target: Rs 640-650| Stop Loss: Rs 588| Return 6-8 percent
On the weekly chart, the stock has decisively broken out its 10 weeks consolidation range of 530-590 levels on a closing basis and sustaining above the same. This breakout is accompanied with rising volumes which supports bullish sentiments ahead.
The daily and weekly strength indicator RSI and the momentum indicator Stochastic both are in positive terrain which supports upside momentum to continue in near term.
The stock is well placed above its 20, 50 and 100 day SMA which supports bullish sentiments ahead. The buying range is Rs 608-596.
Hindustan Zinc: Buy| LTP: Rs 292.95| Target: Rs 305-310| Stop Loss: Rs 282| Return 5-7 percent
On the daily charts, the stock price has decisively broken out from its daily consolidation range of Rs 270-290 levels on a closing basis and is now sustaining above the same.
This breakout is accompanied with rising volumes which supports bullish sentiments ahead. The daily and weekly strength indicator RSI and the momentum indicator Stochastic both are in positive terrain which supports upside momentum to continue in near term.
The stock is well placed above its 20, 50 and 100 day SMA which supports bullish sentiments ahead. The buying range is Rs 290-286.
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