1) Nifty bulls got fever at 20,000-mark. Do the charts indicate that the milestone is likely to be hit next week if IT stocks do not play spoilsport?
Our favoured end point for the last week’s move was 19850-950, and though there was a brief penetration above the upper range, momentum failed to sustain. However Friday’s sharp turn lower has eased the prospects of a collapse especially with several micro supports close by, ready to step in. This encourages us to look for upsides early next week, aiming for 20,160, with expectations of banking stocks to throw in their weight, even if IT play spoilsport. However, inability to float above 19680, wouldnegate the upside views, exposing 19460.
2) How should one trade Nifty Bank, which was the top outperformer in the week? Will it outpace Nifty again?
Notably, Nifty PSU Bank Index saw better traction than BankNifty with all of the index constituents gaining close to 5% on an average. Major gains were seen in SBI, Bankbaroda, Canbk, PNB and Unionbank which contributes around 80% to Nifty PSU Bank index. 77% of the banking stocks in F&O segment have seen short covering this week. Nifty Bank was driven by gains in ICICIBank, SBIN and Kotakbank which together forms around 44% of Nifty Bank Index. These three stocks are either in or close to overbought zone. However this is characteristic of a bull market, and with several bank results being announced in these few days, this space is likely to be buzzing, and Nifty Bank is likely to best Nifty.
3) How do the charts look like for IT stocks like Infosys and HCL Tech?
The deep cut in last few days appears to have found bargain buying in HCL Tech, providing a window for upside reversal, aiming new peaks. But, should it fail to float above 1135, a new leg of downsides could unfold. Meanwhile, expect Infy to see continue facing liquidation pressure with upswings likely to turn lower without penetrating much above 1350 and aim for 1070. However, direct rise above 1380/1406 region would neutralize the negative vibes.
4) Sterling and Wilson Renewable rallied around 28%. How to trade the stock now?
Despite the vertical rise, exhaustion has not set in yet, as the subsequent days of trade has found reasonable amount of consolidation, keeping the uptrend fresh. This encourages to look at the present move positively, with a view to enter on dips to 355-45 with a month’s view of 380 and a 3 month view of 450. Downside marker needs to be placed below 340.
5) With the key events of demerger and results behind us, what’s in store for RIL now?
RIL’s stock is still in a flux, burdened by several events. Meanwhile, JFS is yet to see trades, and next week awaits response to results, while several indices continue to see the impact of the demerger. The week’s close below JFS auction day rates is a weak signal that calls for 2485-2408.
6) Give us your top 3-4 trading ideas for the week. (TP, rationale, SL)
TRITURBINE (CMP: 406)
Entry range: 407 – 398
Target: 420 – 434
The stock has been moving within a trading range since the later part of June and has seen a range breakout lately. Also, the MACD has broken above the signal line in the daily time frame which is painting the short outlook rosy. We expect the stock to move towards 420 and thereafter towards 434 levels. All longs may be protected with stoploss placed below 387.
- SHRIRAMFIN (CMP: 1831)
Entry range: 1840 – 1817
Target: 1895 – 2060
The stock has broken out of the horizontal resistance formed since early July marking fresh all-time highs this week. We expect this momentum to continue with MACD forest showing exhaustion in daily time frame and MACD breaking above signal line in monthly time frame hinting at bullish outlook for the stock in the near term. We expect the stock to move towards 1895 and thereafter towards 2060 levels. All longs may be protected with a stoploss placed below 1780 levels.
First published in The Economic Times