We expect Nifty to initially head towards 11,100-11,180 levels and will not be surprised to see this sturdy wall getting demolished quite soon to extend the relief rally towards 11,350–11,475
The mood remained largely muted last week on the back of weak GDP numbers, which hit a multi-year low. Hence, the selling momentum accelerated after some consolidation.
We are almost unmoved on a weekly basis but the development that happened during last week was encouraging and adds further conviction to our previous week’s optimistic stance.
In the previous article, we had highlighted a few notable observations, which are hinting towards some hope of a relief in September.
This week we see possibility of the base shifting higher to 10,746 from 10,637 levels. Weekly charts of the Nifty and Bank Nifty exhibit copybook ‘Bullish Dragonfly Doji’ patterns and the Nifty Midcap 50 depicts a ‘Bullish Hammer’ around a cluster of supports.
We remain hopeful and expect the index to initially head towards 11,100-11,180. In fact, we will not be surprised to see this sturdy wall getting demolished quite soon to extend the relief rally towards 11,350–11,475 levels.
On the lower side, immediate supports are placed at 10,867–10,816, but the validity of the above-mentioned pointers remains intact as long as key support of 10,746–10,637 remains defended successfully.
All the above-mentioned hypothesis as of now is based on various assumptions, but we hope for it to turn into a reality, which will bring back wider smile on the faces of domestic traders/investors who are desperate for some revival.
Here is a list of top two stocks that could return eight-to-nine percent in the next three-to-four weeks:
Tata Steel: Buy| LTP: Rs 356.35| Target: Rs 388| Stop Loss: Rs 337| Upside 9%
In the initial part of the correction, the stock did not move as per our expectations but now the way it has shaped up, things look a bit encouraging.
Also, the entire metal space has shown life in the week gone by after easing off some developments on the global front; augurs well for the counter.
Technically speaking, after consolidating around its multi-year lows, the stock managed to traverse its daily ’20-EMA’ for the first time in last two months.
This resulted in a confirmation of ‘Dragonfly Doji’ pattern on the weekly chart. We recommend buying this counter for a target of Rs.388 over the next few days. The stop loss should be fixed at Rs.337.
Bharat Forge: Buy| LTP: Rs 394.95| Target: Rs 426| Stop Loss: Rs 375| Upside 8%
Along with the metal universe, the entire ‘Auto and Auto-ancillary’ seems to be gearing up for some relief. Although it has done well in the last couple of weeks, this counter was lagging a bit and now in the last couple of days, it is trying to catch up with its peers.
On the daily chart, the stock is on the cusp of breaking the daily ’20-EMA’ and looking at the rising values of oscillators, we expect it to happen in the forthcoming week.
Since it has not done much in the recent past, we expect the relief rally to be sharper in nature. Going with all the above evidence we recommend buying this stock at current levels for a target of Rs.426 over the next few days. The stop loss can be placed at Rs 375.
(The author is Chief Analyst- Technical & Derivatives, Angel Broking)Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.