The market is expected to consolidate by taking a support at psychological 21,000 mark on the Nifty 50, in coming sessions. Any correction below the said zone can drag the index towards 20,800 area, but on the higher side, the index may face resistance at 21,200-21,300 levels and around 21,600 may be its top for the recent sharp rally for the time being, experts said.
On December 20, the Nifty 50 tanked more than 300 points to 21,150, and the BSE Sensex dropped over 900 points to 70,506, while the broader markets fell quite sharply on profit taking as most of experts concerned about valuations after significant run up across caps. The Nifty Midcap 100 and Smallcap 100 indices were down 3.3 percent and 3.6 percent respectively.
On the weekly basis, the Nifty 50 corrected 1.4 percent and Nifty Midcap 100 was down 3.4 percent.
Stocks that outperformed the broader markets in the current week included Voltas, IRCTC, and Gujarat Fluorochemicals. Voltas has seen a decisive breakout of downward sloping resistance trendline and formed long bullish candlestick pattern on the weekly charts with robust volumes. The stock jumped 8 percent during the week to Rs 928, the highest closing level since September last year.
IRCTC has seen a breakout of horizontal resistance trendline in the previous week and maintained uptrend for fourth consecutive week. The stock jumped 4.4 percent during the week to Rs 815, the highest closing level since February last year, and formed bullish candlestick pattern on the weekly scale with long upper shadow, indicating profit taking at higher levels.
Gujarat Fluorochemicals climbed 4 percent for the week to close at Rs 3,387, the highest closing level since May this year, and formed bullish candlestick pattern with upper shadow on the weekly timeframe. The stock has seen a breakout of horizontal resistance trendline adjoining multiple touchpoints and traded above all key moving averages (20, 50, 100 and 200-week EMA - exponential moving average).
Here's what Jigar S Patel of Anand Rathi Shares & Stock Brokers recommends investors should do with these stocks when the market resumes trading today:
Since the last couple of sessions, Voltas has gained massive momentum. On the weekly chart, it has taken out a 1.5-year-old bear line (refer to the chart). Recently, it has taken out its weekly previous swing high of approximately Rs 915 and is comfortably sustaining above it, thus making it a lucrative buy candidate.
On the indicator front, the weekly RSI (relative strength index) and DMI (directional movement index) are hinting at a bullish bias in the counter.
Thus, one can buy a small tranche in the zone of Rs 920–930 and another in the range of Rs 890–900. Target would be Rs 1,050 and stop-loss would be Rs 849 on a daily close basis.
Since the last 3–4 months, Indian Railway Catering & Tourism Corporation (IRCTC) has been consolidating in the range of Rs 630–750. Recently, it gave a clean breakout from the said range, which is looking lucrative. Having said that, the breakout on a weekly scale looks genuine since it is accompanied by decent volume.
Additionally, it has taken out the 1-year-old bear trendline (refer to the chart). On the indicator front, the weekly RSI (relative strength index) has taken out its previous swing high of 60 and is currently placed near 68 levels, along with the weekly DMI’s (directional movement index) looking positive, which confirms our bullish stance in the counter.
One can buy in the zone of Rs 800-820 for an upside target of Rs 950 and stop-loss would be on a daily closing basis near Rs 740.
After consolidating in the zone of Rs 2,800–2,950 for some time, the said counter has given a clean breakout from the said range and is currently hovering near the Rs 3,400 mark. Since it has taken out a 1-year-old trendline (refer to the chart), thus making Gujarat Fluorochemicals attractive at the current juncture.
On the indicator front, the weekly RSI has reversed from the 50 level, which confirms our bullish stance in the counter.
One can buy a small tranche in the zone of Rs 3,360–3,400 and another in the range of Rs 3,250–3,275. Target would be Rs 3,675 and stop-loss would be Rs 3,150 on a daily close basis.
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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