After rallying for seven consecutive days, we could see some intraday profit booking and hence, one needs to position accordingly and be very fussy in the stock selection
Indian market rose for the second consecutive week in a row pushing benchmark indices higher by over 4 percent to hit a fresh 7-month high in the week gone by. Sensex reclaimed 40,000 while the Nifty50 closed above 11,900 for the week ended October 9.
After rallying for the past seven trading sessions in a row, experts feel that there could be some consolidation before a fresh rally begins in the coming week, but stock-specific action will continue.
In the last couple of weeks’ rally, global markets played a major part as we saw some gravity-defying moves despite some in-between uncertainty.
Foreign institutional investors (FIIs) have poured in more than Rs 5,000 crore in the cash segment of the Indian equity market while DIIs have pulled out more than Rs 2,000 crore in the same period, data showed.
One big factor which has contributed to the vertical up move seen in the Nifty50 is the banking pack. Experts feel that the index could reclaim 12,000 but may face pressure near 12,200, and support is placed firmly near 11,700 levels.
“The way Nifty surpassed the August 31 high of 11,794 with some authority and is now within the kissing distance of 12,000, the positivity is likely to extend further. Importantly, the banking space, which was following the benchmark in the entire recovery, finally showed some dominance on Friday,” Sameet Chavan, Chief Technical & Derivatives Analyst at Angel Broking told Moneycontrol.
“As far as levels are concerned, the base has shifted higher and the previous resistance area of 11,700–11,450 should now be treated as strong support. The moment 12,000 is taken out, we may see a steady move towards 12,200 – 12,400 levels,” he said.
“We would like to highlight that since the move is extremely swift, anytime we can see some intraday profit booking and hence, one needs to position accordingly and be very fussy in the stock selection,” explains Chavan.
We have collated a list of ten short-term trading ideas by experts for the next 3-4 weeks:
Expert: Rajeev Srivastava, Chief Business Officer at Reliance Securities
The stock has made higher bottoms in the past few weeks and is trading above its short-term averages confirming the uptrend from the current levels.
Stochastic & RSI on the weekly charts is also coinciding with our view, as both the indicators are in bullish mode. However, in case of a major decline, the multi-week support of 1270 will continue to work as the key support for the stock.
The stock remained sideways after a sharp decline and the key technical indicator on the short-term timeframe have reversed from their oversold zone and gave a buy signal.
The long-term 200-week average is placed at Rs 1225 levels that would continue to act as strong support. We believe that the stock will utilize prior consolidation and will resume its up-move and that could lead the stock towards the recent high.
The stock reversed after forming a Double Bottom Pattern around Rs 175 and later it managed to recover partial losses of the week.
We believe that the stock will continue its up-move for the short-term, amid rise seen in Stochastic & RSI from their oversold zone. We believe that the current up-move will continue and the stock will test its medium-term resistance zone.
Expert: Manish Srivastava, Senior Technical Analyst (Equity & Currency) at Rudra Shares & Stock Brokers Ltd
The stock has been hammered from the Rs 1,020 odd level in the last few weeks and is now showing signs of life once again. The momentum indicators are witnessing a positive crossover and a range shift from bearish zone to sideways zone can be seen in RSI.
The bullish candlestick pattern on Friday's trading session is adding confirmation that bulls are likely to have upper hands in the coming days. The prices are trading above the 20-day simple moving average indicates a short term rally in the counter.
The 'Hammer' candlestick pattern on the weekly chart backed by follow up buying suggests that bulls have entered at lower levels. Traders can initiate buying at current market price (CMP) and on any dip till Rs 890 for the short term gain.
The stock is trading near a long-term support level and contra trend buying is expected in the coming days.
The 'Dragon Doji' candlestick pattern on the weekly chart suggests that the recent fall has been exhausted and demand from current levels could result in a short term bounce back in the counter.
In the daily time frame, bullish candlestick pattern and positive divergence indicating that the recent fall is likely to get abated. Positive crossover in momentum indicators suggesting that stock is poised for a pullback rally.
Retracement can be seen in the counter after a recent breakout. The momentum indicators have started trading in a bullish zone and prices are trading above major short-term and medium-term moving averages.
The fresh leg of the up move can be expected in the counter in the near term. RSI on the monthly chart is bouncing back from significant support levels where the higher top and higher bottom cycle is intact.
Traders can initiate buying through a pyramiding strategy where buying positions can be initiated at current levels and more quantity can be added once the stock starts trading above Rs 528.Expert: Shabbir Kayyumi, Head of Technical Research at Narnolia Financial Advisors Ltd.
Mahindra & Mahindra Financial Services: Buy around: Rs 130| LTP: Rs 133| Target Rs 160| Stop Loss Rs 110| Upside 20%
The scrip spurted from a low of 112 and formed cup & handle pattern, it showed pullback on upside marked the high of 136 marks. Currently, it is waiting for the breakout on the upside so that it can accelerate buying momentum further.
The emerging line of polarity on the daily time frame of the chart is suggesting bullish momentum in the scrip. Indicators and oscillators are also showing a conducive scenario in the coming sessions.
So based on the mentioned technical structure one can go long in the scrip around 130 for the target of 160 and 170 marks with a stop loss of 110 marks.
The stock on the daily chart is expected to give inverted Head & Shoulder breakout and looks positively poised to trade higher. Also on the daily chart, scrip took support from the line of parity and bounced back with marginally higher volumes, which suggest the next upswing in the prices.
The key technical indicators in the near-term time frame are in buy mode. The stock has the potential to continue the current up move and will test higher levels.
Hence, looking at the current structure we recommend buying in the stock around 178 with a stop loss of 166 on a closing basis for the target of 198 levels.
Expert: Sameet Chavan, Chief Technical & Derivatives Analyst at Angel Broking
As we stepped into ‘Unlock 5.0’, the government eased a lot of restrictions on restaurants and bars. Hence, the liquor stocks saw some buying traction post this development.
Recently, UBL had undergone some selling over the past few weeks and after a brief pause, we witnessed a sudden spike in the stock prices.
If we look at the volume activity, we are seeing a decent rise, providing credence to the move.
This may not be the complete trend reversal but at least we can see a short-term bounce in the stock. Hence, we recommend going long for a target of Rs.1035 in the coming days. The stop loss can be placed at Rs.964
In the last couple of weeks, the entire cement space had a stellar move and Grasim being the holding company of cement giant Ultratech Cement, did not move to the tune of it.
This sluggishness finally resulted in a profit-booking last Friday and despite the benchmark hitting a new seven-month high, this stock had a weak close.
The daily chart now resembles a ‘Hanging Man’ pattern (formed on Thursday), which got confirmed on a closing basis as well.
Looking at these observations, we expect the stock to underperform and witness further profit-booking in the forthcoming week.
Hence, momentum traders can look to sell on a bounce around Rs 752-755 for a target of Rs 715 in the coming days.Disclaimer: The views and investment tips expressed by 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.