New highs can be a far cry for mid and small cap indices in the near future but at least we can see a decent up move in this space as they try to catch up with the broader markets.
While the Indian market closed the truncated week on a positive note with gains of about 1%, but vertical move needs to be corrected.
If Nifty closes above 11,620-levels we may head towards the zone of 11,800–12,000
At this point in time technical set up is looking somewhat weak as the market has almost rallied in one way for the last 8 weeks from the lows of 10,550. This vertical move needs to be corrected as it can’t continue in a unidirectional manner.
The price action of the current week depicted a ‘Shooting Star’ kind of formation on the weekly candlestick charts.
Hence, next week if we consistently trade below 11,499 levels then there is a bright chance that we can form a short-term top at 11,620 and then head towards 11,340 on the downside.
To negate this bearish formation, Nifty need to close above 11,620 levels. On such a close, we may head towards the zone of 11,800 – 12,000. But, in our opinion, traders will get a compelling opportunity to trade only after a correction.
How are Bank Nifty charts looking like?
Weakness is getting more pronounced in Bank Nifty as bearish patterns are more clearly visible in this index.
There seems to be almost a ‘Double Top’ kind of formation in this index as recent high of 28,325 is a tad bit lower than lifetime highs of 28,377 from where it appears to have resumed its downtrend.
A retest of recent low of 27,739 looks inevitable and a decisive close below 27,739 shall lead to the test of its 50-day EMA whose value is around 27,273 as on Friday’s close.
Yes, market breadth has significantly improved in recent rallies. But, still, Nifty500 index is yet to make a decisive breakout above its January 2018 highs of 9,895.
Just on last Thursday, the said index has made new highs as it hit 9,900 by marginally getting past January 2018 high of 9,895 but it failed to build on the rally further.
A sustainable up move above 9,900 can significantly strengthen the sentiment in broader markets and can give a much-needed fillip to the mid and small-cap space which remained significant underperformers.
New highs can be a far cry for mid and small cap indices in the near future but at least we can see a decent up move in this space as they try to catch up with the broader markets.
RUPEE
In the past, 69 acted as a floor for INR as it took support in the zone of 68.80 – 68.90 on multiple occasions between the year 2013-2016. Now, that floor appears to have caved in paving the way for more weakness.
If Rs 70.50/USD is breached then based on long-term charts we have a target placed around Rs 72.50/USD. Unless INR settles below 68.89 vis-a-vis USD, the uptrend is unlikely to kick in. For some time it may remain range bound between the levels of Rs 69.40-70.50 per USD levels.
Here is a list of top three stocks which could give good returns.
Zee Entertainment: Buy| LTP: Rs 509.10| Target: Rs 540| Stop Loss: Rs 490| Return 6%
On multiple occasions, this counter bounced back from the lows of Rs 490 or so. Hence, there seems to be a trading opportunity in this counter as it smartly recoiled from the intraday lows of Rs 500 which was in line with its past behaviour.
Hence, positional traders are advised to buy into this counter with a stop below Rs 490 on a closing basis for a target of Rs 540.
Bajaj Electricals: Buy| LTP: Rs 564| Target: Rs 603| Stop Loss: Rs 535| Return 7%
After retracing around 80 percent of its strong rally from the recent lows of 520 – 627 this counter appears to have posted a bottom around 538 levels and resumed its upmove.
Hence, sustaining above this level it can head to test its gap present in the zone of Rs 581 – 603. Hence, positional traders should buy into this counter for a target of Rs 603 and a stop below Rs 535 on a closing basis.
Eicher Motors: Buy| LTP: Rs 28,796| Target: Rs 30,080| Stop Loss: Rs 28,350| Return 4%
At hitting a recent low of 28,076 this counter appears to have retraced 50 percent of its last leg of the rally from the lows of 26,601 – 29,470 levels.
Last three days of price action is suggesting that it is now positioning itself for a fresh leg of an upswing. In that scenario, it can ideally head towards 30,080 levels.
Hence, positional traders are advised to buy into this counter for a target of Rs 30,080 with a stop below Rs 28,350 on a closing basis.
MORE WILL UPDATE SOON!!
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