What are market trends indicating?
It was an interesting week because it was not just the end of the fourth month of successive price uptrend for the index or the fourth series of such a strong price recovery for the Nifty but it also marked a lot of positives such as the resurgence of Nifty IT and comeback for Nifty Pharma. A slew of pharma stocks has managed to breakout. The Nifty is finding it a bit tough to try and break out of the 11,400 levels. This can be attributed to the sudden weakness which has come back into Reliance Industries which has been one of the strongest stock on the largecap front.
Even though Nifty is showing some bit of weakness, jitteriness in terms of positions on the F&O side as well as on the stream, there are still a lot of stocks in the offing which short term trader would be pleased about. Over the next week, the index texture could remain more or less in a range. The range could probably expand to another 200 points on the side. So, earlier it was 11,000 to 11,500, now the fresh range for the next week at least should be 11,400 as resistance and closer to 10,800 or 10,850 as support. The action should be more stock specific and towards sectors which are in strong momentum; index could largely remain in this range.
What indications are you getting on the charts of Reliance and Bharti Airtel?
Both these stocks look quite different in terms of price projections because Bharti on one hand is taking its own time to breakout above key ranges. The question mark for a lot of traders and investors right now is when would Bharti Airtel manage to breakout? Many of the traders who anticipated some sort of a positive view on the results were probably expecting that the stock would break above the 600 levels and then find the kick start in its uptrend. But sometimes it happens that the stock even post the results goes into a bit of a range, it tends to tire out a lot of short term traders or the ones who have entered late into the kind of rally and Bharti Airtel’s charts are typically showing that kind of a price pattern. One needs to have more patience as the stock could take some more time to grind in this range; there is be a possibility that the stock may even drift Rs 10-20 lower from current levels but I believe the stock can soon break out above the 600 levels. It is a matter of when rather than if for Bharti Airtel.
For Reliance Industries, it is a different case altogether because the stock had an almost unabated kind of a rally from Rs 1200-1300 mark the moment the Facebook Jio deal was announced, and post that the stock had even broken the 200-day moving average. So, now this correction comes as a bit of a breather for the stock. Many of the institutional buyers have missed out on buying Reliance Industries on a much higher proportion. Hence, there is a possibility that the stock may not go through a big correction. The stock would remain a bit muted for a couple of weeks before it tries to come back to those Rs 2000 kind of levels but there are lot of supports for the stock price at lower levels and a lot of demand for the stock.
Going into the week ahead, any stock strategies that you would like to suggest?
There are specific themes which could probably play out and one of them which is the fall in dollar index. The trend should continue for the next couple of weeks at least and the biggest beneficiary in that regards could be the metal pack. JSW Steel is what I am betting on as it is looking extremely strong on the short-term charts. In fact, last week, the stock was just on the verge of being back above its 200-day moving average. It is a very strong breakout which is getting due for JSW Steel. It has confirmed a lot of positive breakouts on the weekly charts as well. Next week and probably post that as well, you could see the metal stocks performing pretty well. So one can buy JSW Steel with the target of Rs 240 and stop loss at Rs 210. In the midcap space, one stock is looking extremely strong and the recovery in that stock over the last three months has been nothing short of spectacular and that is Tata Power. At current levels of 48-48.5, the stock is still standing strong above its 200-day moving average; the volume patterns and the longer-term indicators are suggesting that the stock could be a very strong breakout candidate from near-term perspective as well. So Tata Power is also a buy, more of a positional play with a target of Rs 55 and stop loss at Rs 45.
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