Rupee could weaken against the USD to Rs 79.9-81; GATI, Tata Chemicals top buys ideas

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With this in the backdrop, as well as with the momentum in favour of upsides, USDINR is poised for a rapid ascent to 79.9, followed by 81, with downside risk marker placed at 78.9 or 78.5,” says Anand James, Chief Market Strategist, Geojit Financial Services.

In an interview with ETMarkets, James said: “A push above 16235 early on Monday, would encourage upmoves to aim for 16340 during the day. Sustainability is doubted though,” Edited excerpts:

A good week for Indian markets where bulls took control and pushed the benchmark indices above crucial resistance levels. Was it crude cool-off or value buying?

The cool-off in commodities, especially crude oil has indeed mellowed down the inflation expectations thereby improving the risk appetite for equity traders.

Meanwhile, the average net sales per day by foreign institutional investors (FIIs) fell during the first week of July to Rs 443 crore, when compared to Rs 2,641 crore net sales per day in June. This release of pressure has given an additional buoyancy.

Which are the important levels that one should track in the coming week?

We had gone into the last Monday with 16200 for the week as the base case scenario. The level of 17000 could be our medium-term target as the optimistic scenario.

With Friday’s opening burst meeting rejection trades from at the 60-Days SMA of 16280, the strength of the uptrend would be put to test on Monday.

A push above 16235 early in the day, would encourage up moves to aim for 16340 during the day. Sustainability is doubted though.

Inability to float above 16195 will expose 16150 which was Friday’s strong support, as well as 16115. The downside marker for the present upmove is 15940 which is likely to be an important support for the index in the event of a down move.

Where do you see the dollar index headed in the coming week? Do you see more rupee weakness in the coming week?

In the backdrop of Friday’s US Non-Farm Payrolls data showing that the US jobs were added at a much better pace than expected, the fears are that we are at the door stop of a recession, and appear stretched.

This could embolden the US Fed to stay on course with their tightening measures and keep the Dollar Index extend the bullish streak.

However, the upcoming inflation data hold all the cards for now with the expectation of a month-on-month increase of 1.1% in CPI.

If the dollar index’s dips are held above 106.7-105.6 early in the week, brace for a rise towards 109. With this in the backdrop, as well as with the momentum in favour of upsides, USDINR is poised for rapid ascent to 79.9, followed by 81, with downside risk marker placed at 78.9 or 78.5.

What about Crude oil? What does the chart tell us?

Many of the commodities be it crude, wheat, or copper, which have seen significant falls since June, have now started to recoup losses.

Having bounced off 97, the level that has held multiple bear attempts since March 2022, we could see a swing towards $111/bbl for Brent Crude.

On the Sectoral front – Consumer Durables and capital goods saw maximum gains. What led to the price action?

The cool-off in commodities has been a significant relief for these sectors. But the gains have been way too rapid to go without a pullback, which is to be expected this week.

Avenue Supermart rose over 14% in the run up to results in a week. Where do you see the stock headed? What does the chart structure tell us for medium to long-term investors?

Within the first week of July, Avenue Supermart has recouped almost all it lost through the entire month of June. Friday’s close has acknowledged the congestion resistance of 3975, which may have sucked a good deal of bullish momentum.

Oscillators suggest that even if this barrier is crossed, in the backdrop of the result announcement, a corrective move is round the corner.

Any 3-5 trading ideas for the next week?

Here is a list of top trading ideas –

GATI: Buy| LTP Rs 146| Buy between 142-146| Target Rs 155 – 165| Stop Loss Rs 136

After the decline that we saw from April 2022 till the first half of May 2022, the stock has been moving within a triangle pattern since the second half of May.

Recently, it has broken out of the triangle pattern resistance. On a weekly time frame, it has been within a descending triangle pattern since Jan 2022 and is currently bouncing off the lower trendline support.

The current move is aiming at the pattern resistance of 170. MACD has shown bearish exhaustion that indicates positivity in the near term; hence, we expect 165 in the short term.

Tata Chemicals: Buy| LTP Rs 836| Target Rs 860-890| Stop Loss Rs 809

After hitting an all-time high in October 2021, the stock has been moving within a downward sloping trend channel. This week, it has bounced off from the channel support of 780 and has formed a candle resembling bullish Marubozu indicating a potential move towards the channel resistance of 1000 in the short to medium term.

In the extremely short term, we expect the stock to bounce towards 890 which is 38.2% Fibonacci retracement level of the May 22 and June 22 move.

MACD has also shown exhaustion in the monthly time frame adding color to the bounce-back prospect.

Carborundum Universal Ltd: Buy| LTP Rs 776| Target Rs 840| Stop Loss Rs 744

The stock has retraced close to 50% of the move that we saw between October 2020 and Jan 2022.

This week, the price has broken above the weekly Psar and the MACD has broken above the signal line in the weekly time frame hinting at a possible move towards the 61.8% Fibo retracement level of 890. The monthly chart has also seen a candle resembling bullish Marubozu supporting our bullish expectation. However, we expect a modest move towards 840 from the current levels in the short term.

First published in Economic Times