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Nifty may scale up towards all-time high of 12,400 in Feb series: Axis Securities

We expect Smallcap and midcap stocks to perform further and we can see another 3-5% upside in Midcap and smallcap space.

February 10, 2020 / 12:14 PM IST
 
 
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We expect Smallcap and midcap stocks to perform further and we can see another 3-5% upside in Midcap and smallcap space, Rajesh Palviya, Head Technical & Derivatives at Axis Securities, said in an interview with Moneycontrol’s Kshitij Anand.


Edited excerpt:

The momentum in Indian market reversed in just 4 trading sessions. Nifty rose 3.7% in the week gone by, do you think the momentum will continue?

Yes, we do think that the momentum is likely to continue for various reasons and there is a high probability that Nifty50 could actually scale up toward the all-time high level of 12,400 level in February series. Technically speaking, post-Budget, the index has registered a low (11,614) which is around its 200-Day (11,655) EMA support and then bounced back on a strong note.


It witnessed a “V”-shaped recovery and recovered all the earlier losses. On a Week-on-week (WoW) basis, the index gained 3.75 percent to close 12,086 levels.


Going forward, any decisive close above 12,230 levels will confirm the above said pattern and the projected target of the pattern is around 12,600-12,800 levels.


This buying support zone also coincides with its 50% Fibonacci Retracement level (11533) of the previous up move (10637-12430) which remains a crucial support zone to watch for.


The daily strength indicator RSI has bounced from the oversold territory after a period of 6 months indicating strong comeback by the bulls.


Heavyweights such as HDFC Bank, HDFC Ltd, and ICICI Bank have recovered sharply from the lows indicating buying support at lower levels. The Advance decline ratio has turned positive from the last 3 days indicating that the overall breadth has turned positive for the market.

What are the important support and resistance levels to watch out for in the coming week?
The Nifty is likely to face immediate resistance around 12,200, and once it manages to cross above the said level, we may see another round of fresh buying in the market.

It may scale towards 12,350-12,450 in the short-term, however, on the lower side 12050 -11960 is likely to act as crucial support for any corrective action in the near-term. Our preferred strategy would be to buy quality stocks if Nifty corrects and comes near the support level


Top five stocks which recorded a breakout in the week gone by and are still ripe for future returns?
Here is a list of top 5 stocks which could be good breakout buys at current levels:


Bharat Petroleum Corporation Ltd: Buy| LTP: Rs 491| Buying Range: Rs 492-484| Target: Rs 525-537| Stop Loss: Rs 470
The stock has broken out from a three-month-long “Flag Formation” on a closing basis which indicates good comeback by the bulls with high volumes.