By Mr. Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking)
We had a pathetic start for the week on Monday as Nifty surprisingly openeSet featured imaged with a massive cut of more than 200 points as indicated by the SGX Nifty. This was mainly on the back of mounting concerns over the COVID-19 cases on the domestic front. Since it weighed down heavily on the financial space, the knock turned out to be a brutal one. In this process, the Nifty went on to tumble over 500 points to test the sub-14300 territory. Things looked extremely scary at the close on the opening day; but fortunately there was no follow through seen to it. In fact, throughout the remaining part of the week, we managed to recover fair bit of ground to trim major portion of losses.
Since last couple of weeks, market was trapped in a small range where it neither had strength to stay beyond 14900 nor it was letting it slide below 14500. Due to Monday’s sharp selloff, Nifty breached this range in the downward direction and the major culprit of this was clearly the entire financial basket. Although, Nifty didn’t violate major support of 14200, the BANKNIFTY finally slipped below its cluster of support placed at 32400 – 32200. Hence, till the time we do not see banking index crossing 32500 – 33000 levels, we are certainly not out of the woods yet. As far as Nifty is concerned, 14700 – 14850 remains to be a sturdy wall and surpassing it would really be a daunting task for the bulls. On the downside, 14500 – 14350 – 14250 are the levels to watch out for.
If we have to take out any positives from the week gone by, then it would certainly be an overall improvement in the market breadth which remained strongly in favour of advances. Also there were few pockets like IT and Pharma did exceedingly well towards the latter half. But we would like to highlight one point that the NIFTY MIDCAP50 index has confirmed a ‘Lower Top Lower Bottom’ sequence on daily chart along with the breakdown from ‘Head and Shoulder’ pattern. Hence, identifying the apt theme and the potential movers within the same would prove out to be the key aspect. In our sense, it’s better to stay light on positions and avoid aggressive longs till the time few key levels are not reclaimed convincingly.
- NSE Scrip Code –STRIDES PHARMA
View – Bullish
Last Close – Rs. 922.15
Justification – The PHARMA seems to be in a different orbit altogether since last 12 months. Mostly all counters from this space have completely compensated for the under-performance as well as boredom they had given for the previous 5 years. Now stocks are in a complete hurry as the recent brief period of time as well as price correction got bought into. STRIDES PHARMA failed to participate in last few days’ rally; but on Friday, we finally witnessed a decisive price and volume breakout from the recent congestion zone. We recommend going long around 912 – 907 for a target of Rs.992 in coming days. The strict stop loss can be placed at Rs.872.
- NSE Scrip Code –GRASIM
View – Bearish
Last Close – Rs. 1353.20
Justification – Generally we do not associate this counter with the term ‘Sell’ or ‘Bearish’; because of its phenomenal run since the previous March lows. The stock price have given three-fold returns since then without even seeing a small phase of price correction. Although the higher degree trend remains strongly bullish, we are now seeing some signs of decent short term correction in the stock. On the daily chart, we can see prices falling convincingly below ’20-EMA’ along with the bearish crossover of short-term averages for the first time in last few months. We recommend selling on a small bounce for a target of Rs.1270. The strict stop loss can be placed at Rs.1402.
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