Sameet Chavan
Barring the first couple of days, the week gone by was a boring one for index traders.
Although the banking, metal and capital goods stocks managed to chip to some extent, the real outshining space was the mid and small-cap universe.
The overall structure remains sturdy, but we believe that sooner or later, the market is likely to witness some correction, which would be healthy in the longer run.
In the last five months, we used all dips to get into the market. But now looking at a few observations, we do not want to maintain similar optimism in the short term.
Last week, we mentioned 78.6 percent retracement of the entire fall as well as the 100 percent price extension of crucial swings.
Nifty has marginally surpassed it and it may even extend further. But, even if it moves towards 11,450-11,500, we continue to advise booking profits in rallies.
On the daily chart, we can see a small 'Rising Wedge' and bearish 'Wolfe Wave’ pattern.
A move below 11,250-11,200 would confirm a near-term reversal for some price correction in the coming days.
As far as the Nifty Midcap50 index is concerned, although it has surpassed the weekly ‘200-SMA’ marginally, we advise taking some money off the table now and aggressive bets should ideally be avoided overnight.
Here are two buy calls for the next 1-2 weeks:
NRB Bearings | Buy | LTP: Rs 85.50 | Target price: Rs 96 | Stop loss: Rs 81.70 | Upside: 12%
The entire auto and auto ancillary space has been on a roll for the last few weeks. However, this stock is yet to show similar strength as compared to some of its peers.
But the way charts are shaped up, the stock prices are about to catch up in the coming days.
Price-wise, recent recovery from lower levels was followed by consolidation for nearly a month.
Last Friday, we finally witnessed a breakout happening from the congestion zone.
If we look at the volume activity, it has risen substantially if compared with the average daily volumes.
In addition, the RSI-smoothened is about to enter a bullish territory i.e. beyond the 70-mark. Hence, we recommend going long from the current level to a decline up to Rs 84 for a target of Rs 91-96 over the next few days.
Vinati Organics | Buy | LTP: Rs 1,056 | Target price: Rs 1,130 | Stop loss: Rs 999 | Upside: 7%
After the spectacular recovery in the month of April, the stock prices did nothing.
It was consolidating in a slender range and kept hovering around the ‘200-SMA’ on the daily chart.
For the last few days, we have been observing intermittent mild up-move in the stock along with a spike in volumes.
Last Thursday, these small up-moves got converted in a huge intraday rally to cross all near-term barriers.
Since it is accompanied by sizable volumes, the stock has the potential to perform well in the coming days.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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