On the upside, the next milestone of 13,000 is likely to be achieved very soon. In fact, we do not rule out the possibility of reaching 13,100–13,200 in the forthcoming week itself, Sameet Chavan, Chief Analyst Technical and Derivatives, Angel Broking Ltd said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) A volatile week for Indian markets. Fresh record highs in the run-up to Diwali then some mild profit taking in the second half of the week. What led to the price action?
A) After eight days of marathon rally, the market ended its winning streak in the latter half of the week gone by. One shouldn’t be too wary about it, because most of the events are behind us and technically, markets were a bit overstretched.
So, some sort of breather was very much on cards. The market generally experiences either ‘Time’ or the ‘Price’ correction. Looking at the recent development, we would rather consider this as a ‘Time’ correction rather than a price decline.
Q) Small & midcaps underperform in the week gone by. What is your outlook on the broader market? Does it look like FIIs favoured quality large caps more than mid and small caps? What are your views?
A) Small and Midcaps may have underperformed a bit but the way their respective indices are positioned due to the last two weeks’ of price action, we expect a larger rally to unfold soon.
Mostly, FIIs prefer quality large or semi-large cap stocks and when markets enter a comfortable position after sailing through some tough times, big boys tend to take some pause for a while.
This is the time when attention shifts to the mid and small-cap universe. Hence, we expect this space to give some remarkable moves in the coming weeks.
Q) What is the outlook for markets for the coming week? Any important data to watch out for that is likely to impact the sentiment?
A) Last week, we had witnessed a ‘Bullish Flag’ breakout around 12050 and since then markets never looked back. With its marathon rally in merely eight days, markets are very much in a commanding position.
All’s well that ends well and hence, from hereon we can see a brighter picture till the next SAMVAT. Looking at the daily chart, we can observe a couple of encouraging developments on charts.
The ‘RSI-Smoothened’ is moving northwards after entering the bullish territory above 70 and adding to this, the ‘ADX (14)’ is becoming stronger as we can see its value rising well above the 25 mark.
Generally, when we see these conditions together, it provides impetus to the rally. Hence, any dip towards 12600 – 12450 should be used as a buying opportunity.
On the upside, the next milestone of 13000 is likely to be achieved very soon; in fact, we do not rule out the possibility of reaching 13100 – 13200 in the forthcoming week itself.
Q) What is your outlook on markets for SAMVAT 2077?
A) In our sense, this is just the beginning of a ‘Mega Multi-year Bull Run’. With a broader view, if we take reciprocal retracement of the entire fall from previous high to march lows, we have just crossed 100% and the next destination is around 127% retracement that comes around 13700 – 13800.
If things fall in place perfectly for the bulls around the mentioned milestones, we never know, this projection can even get extended towards the ‘Golden Ratio’ of 161% placed around 15000- 15300.
Obviously, all this will take a lot of time and we just wanted to give a glimpse of this based on the overall price development in the last few months. We hope that our hypothesis turns into a reality by the next SAMVAT and now, we take this opportunity to wish you all a Happy and most importantly a healthy Diwali.
Q) Which sectors are likely to hog the limelight in SAMVAT 2077 and why?
A) If any rally has to last for a longer period of time, financial space needs to perform exceedingly well. We have already seen some glimpse of it in the last couple of months. But still, banking has a lot more room to catch up as it's still nearly 15% away from its all-time high.
Hence, we expect banking to give some stupendous move this SAMVAT. Apart from this, our preference would be on Metal space. Generally, the commodity sector is known for its cyclical nature but the way the ‘Metal’ basket is shaping up, we expect this sector to do well.
Also, in the coming months, we expect ‘Cement’ space to be a dark horse going forward. We will not be surprised to see some mesmerizing moves in cement counters.
Q) Your SAMVAT picks for investors?
A) Here is a list of three stocks for a long term time horizon --
LIC Housing Finance: Buy| Target: Rs 342| Stop Loss: Rs 298
During the week, prices confirmed a price volume breakout from the ‘Multiple Resistance’ zone along with reasonable volumes.
Importantly, stock prices have managed to spend more than 15 consecutive trading sessions above the ‘200-day SMA’ for the first time after July 2019, which is an extremely positive development for this counter.
We recommend going long for a target of Rs.342 in the coming weeks. The stop loss can be placed at Rs.298.
ICICI Lombard: Buy| Target: Rs 1382| Stop Loss: Rs 1247
It just rested around the ‘200-day SMA’ for nearly two months, because of a lack of participation from the market participants. But on Friday, we finally witnessed a notable price action in the upward direction.
This up move is backed by more than average daily volumes and hence, we expect the stock to be back in action in the coming days. Traders are advised to buy for a target of Rs.1382 in the coming days. The stop loss can be placed at Rs.1247. Deccan Cement: Buy| Target: Rs 380| Stop Loss: Rs 324
Last week, ‘Deccan Cement’ confirmed a good price-volume breakout on the daily chart on Friday. The kind of extraordinary volume activity we have witnessed in the up move in recent months indicates some bigger moves to unfold and this probable rally seems to have just begun now.
Hence, one can look to go long for a target of Rs.380 in the coming days. The stop loss can be placed at Rs.324.
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.
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