The market has taken a breather, with the Nifty50 consolidating around the 200- point range in the truncated week that ended in September 9, after more than a 3.5 percent rally, driven mainly by FIIs, but the sentiment has not changed.
Falling COVID cases, with increased pace of vaccination and rising hope of a strong economic and earnings growth, going ahead, continued to support the market even when the number of cases remained at elevated levels in developed countries, including the US and the UK.
The Nifty50 crossed the 17,400-mark but failed to close at that level. It consistently defended the 17,300-mark throughout the week and finally settled above the 17,350 levels.
Hence, experts feel the market is expected to face resistance at the 17,500 level, but may find it difficult to decisively cross it. They advise caution at current levels and a stock-specific approach.
“Price action in key indices last week was extremely dull as we witnessed one of the thinnest weekly trading ranges for a long time now. As of now, the bulls are clearly having a firm grip on the market but as we have been mentioning for a week or so, they would find a bit difficult, going ahead,” said Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking.
“We reiterate our observations for becoming slightly cautious at current levels. The first observation is that we can see the Nifty reaching the 200 percent Fibonacci Retracement of last year’s massive decline — from the January 2020 high to the March 2020 low. The other observation is, time-wise, the Nifty has entered the 7th zone as per the Fibonacci Time Series on the monthly time frame chart,” he said.
According to him, it may look a bit contradictory to adopt a cautious stance when the market is making new highs almost every day. “These evidences have proved their efficacy in the past, and, hence, cannot be overlooked. So let’s see how things shape up, going ahead.”
He feels 17,450-17,500 would now be seen as a sturdy wall. On the flip side, the first sign of weakness would come only after confirming a single-day close below the support zone of 17,300-17,250.
“We advise traders to continue with a stock-centric approach, by following strict stop-losses, and timely profit-booking is also highly recommended,” said Chavan.
Here are 10 trading ideas by experts for the next 3-4 weeks. Returns are based on the September 9 closing prices:
Ashis Biswas, Head of Technical Research, CapitalVia Global Research
Gujarat State Petronet: Buy | CMP: Rs 349.55 | Stop-Loss: Rs 319 | Target: Rs 390 | Return: 11.6 percent
The stock follows a bullish trend on the daily chart. The stock is trading near the support level. We believe it could rise from the support level, and, hence, recommend a buy from the level of Rs 350, with a target of Rs 390 and stop-loss of Rs 390.
Marico: Buy | CMP: Rs 575 | Stop-Loss: Rs 520 | Target: Rs 650 | Return: 13 percent
The stock is in an uptrend, making higher highs in daily and weekly charts. A hammer formation in monthly chart also confirms a buy. With the support of the 200-day exponential moving average (EMA) line, we recommend a buy signal from the level of Rs 575, with target of Rs 650 and stop-loss of Rs 520.
PFC: Buy | CMP: Rs 135.20 | Stop-Loss: Rs 104 | Target: Rs 180 | Return: 33.1 percent
The stock has risen from the support of the 55-day EMA line. The resistance breakout in daily chart confirms a buy. We recommend a buy from the level of Rs 136, with a target of Rs 180 and a stop-loss of Rs 104.
Palak Kothari, Research Associate, Choice Broking
Ashok Leyland: Buy | CMP: Rs 125.30 | Stop-Loss: Rs 120 | Target Rs 132-135 | Return: 5.3-7.7 percent
On the daily chart, Ashok Leyland has given a consolidation breakout recently and closed above it, which suggests possible upside move. Moreover, the price has also moved above the Middle Bollinger Band and 100-day simple moving average (SMA), supporting the bullish strength for the near term.
A volume spurt is also seen in the stock, which indicates buying interest. Relative Strength Index (RSI) and Stochastic also suggest a positive crossover. Based on the above parameters, we are expecting a bullish move till the Rs 132-135 levels.
Finolex Cables: Buy | CMP: Rs 494.50 | Stop-Loss: Rs 470 | Target: Rs 520-530 | Return: 5.2-7.2 percent
On the daily time frame, Finolex Cables has given a breakout of the Cup and Handle Pattern, which is a bullish reversal pattern. It has sustained above the same, suggesting a northward journey in the counter. In addition, the stock has taken support from horizontal line as well as the 21-DMA level and bounced back, which adds strength for the upside.
MACD and Stochastic indicators have also given a positive crossover which indicates the stock has strength for an upside momentum. Furthermore, the price may take an immediate support of 50 percent Fibonacci Retracement level, which indicates an upside rally in the counter for the near term. Based on this technical parameter, we are expecting a bullish momentum.
SAIL: Buy | CMP: Rs 122.20 | Stop-Loss: Rs 112 | Target: Rs 135-140 | Return: 10.5-14.6 percent
The stock has been trading in the Rs 118-Rs 125 range, and has now settled above the 50-day hull moving average (HMA) on Thursday’s trading session, indicating a bullish momentum. On the technical view, the Stochastic indicator has given a positive crossover, indicating a positive outlook.
The momentum indicator is also pointing towards the north, which indicates an upward trend. The Money Flow Index is showing strength. The stock has a support of Rs 112. Once it breaks the resistance of Rs 125.5, a level of Rs 135-140 can be seen.
Shrikant Chouhan, Executive Vice President, Equity Technical Research, Kotak Securities
United Breweries: Buy | CMP: Rs 1,599.95 | Stop-Loss: Rs 1,550 | Return: Rs 1,750 | Return: 9.4 percent
Post a strong breakout formation, the stock has been consistently forming a higher bottom formation, which is broadly positive. For trend-following traders, Rs 1,550 would be the key support level to watch out for. Above this level, the same breakout formation will continue up to Rs 1,750.
ICICI Bank: Buy | CMP: Rs 720.25 | Stop-Loss: Rs 700 | Target: Rs 800 | Return: 11.1 percent
After a Rs 715 breakout, the stock is trading within the Rs 710-Rs 734 price range. Daily and weekly formations suggest that the stock is in to a strong uptrend wave and the texture is likely to continue, if it trades above Rs 700.
Escorts: Buy | CMP: Rs 1,375.95 | Stop-Loss: Rs 1,287 | Target: Rs 1,700 | Return: 23.6 percent
The stock has been consistently forming a higher high and higher low series formation, with modest volume activity. Currently, after a short-term correction, the stock has taken support near Rs 1,300 and it has reversed quickly. A strong reversal formation supports further uptrend from the current levels.
For positional traders, Rs 1,287 would be the sacrosanct level to watch out for. Above that, the medium-term wave is likely to continue up to Rs 1,700.
Sameet Chavan, Chief Analyst, Technical and Derivatives, Angel Broking
IIFL Wealth Management: Buy | CMP: Rs 1,674.75 | Stop-Loss: Rs 1,590 | Target: Rs 1,820 | Return: 8.7 percent
We have not been actively tracking this counter but it certainly caught our attention the way it moved in the last couple of sessions in such a dull market. Price-wise, the data is limited but still we can see it forming some interesting pattern at the current juncture.
On the daily time frame chart, we can see the stock confirming a price and volume breakout from multiple resistance zones to trade at fresh highs. Traders are advised to buy for a short-term target of Rs 1,820. The stop-loss can be placed at Rs 1,590.
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