By Shrikant Chouhan
On Tuesday, the market did much better than expectations. It was one of the exceptional or unique sorts of day for the market as, despite the rise in the long term bond yields from 1.65 to 1.75 and jump in the dollar index from 92.75 to 93.25, we saw an abnormal rally in the market. It was at 14500 last Friday and on Tuesday it closed above 14800 levels. The formation of a Bullish Harami, that the Nifty has made on the last Friday served as a powerful reversal formation for the market. In the previous session, all sectors, except Bank Nifty and Auto, performed well. If we correlate the data of the past few years then in the last few days of the financial year ending, we witness such type of broad-based activity in the market.
On a weekly chart, the market has managed to regain the levels of 14750, which is positive in the short term that would help the market to move beyond 14900 levels and as per the wave theory, a monthly closing above 14930 levels would help the market to rechallenge the levels of 15450, which is all-time highest level.
In brief, on Wednesday, a closing of the Nifty above the level of 14930 would be positive for the market. On Tuesday, the strategy should be to buy if Nifty drops between 14750/14700 levels and for that we need to keep a stop loss at 14600. On Wednesday, we would see a rally in bank stocks, mainly because the Bank Nifty closed above the level of 33700. Bank Nifty can go up to 34500/34700 above the levels of 33700. If the Bank Nifty performs, the Nifty could move closer to 14900 and 15050 levels. On the other side, Nifty / Sensex would find major support at 14750 and 14600 levels.
Technical stock picks are-
BUY, CMP: Rs 597.7, TARGET: Rs 630, SL: Rs 585
The stock had been in a bullish trend forming higher lows on a weekly scale, however, the recent price drop from the highs of 650 seems over as the stock took multiple support at the rising short-term trend line. On the daily time frame after decent accumulation, we witnessed a range breakout and closing of above 20 DAY EMA hints at a bullish uptrend.
BUY, CMP: Rs 430.8, TARGET: Rs 455, SL: Rs 420
On the weekly scale, the 480 zone acted as the strong resistance area due to double top formation which resulted in the minor correction in stock from higher levels developing of a sloping bearish channel. Nevertheless, a reversal from an important support zone on the daily chart is evident for fresh up move.
BUY, CMP: Rs 1,553.7, TARGET: Rs 1,630, SL: Rs 1,520
Past few weeks the stock was into a correction mode and in the last week, it closed near its important Fibonacci retracement point, and simultaneously 20 days EMA acted as a support for the stock. On the whole, a strong bullish candle with the incremental volume activity indicates a new leg of a rising trend from current levels.
BUY, CMP: Rs 995.8, TARGET: Rs 1,050, SL: Rs 970
On a broader time frame, it is observed that the stock is trading into a rectangle pattern, even so, a breakout of a triangle formation with a strong bullish candle is evident on the daily chart with decent volume action, which specifies good strength in momentum in the near term.
(Shrikant Chouhan is the Executive Vice President, Equity Technical Research at Kotak Securities. Views expressed are the author’s own.)