Web Exclusive Stock calls and market outlook by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking Ltd. Sameet Chavan |&
Stock calls and market outlook by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking Ltd.
Sameet Chavan | Mumbai
Last Updated at August 19, 2019 08:21 IST
Hope of relief rally remains intact
Although the week gone by was a truncated one, it was not at all short of action. Despite some signs of relief rally from the previous week and with a smart move by Index heavyweight Reliance of 10 per cent, the market started with deep cuts on August 13th, losing more than one and a half percent. In the rest two sessions, in spite of global turmoil, Nifty managed to avoid further slip and amidst a stock-specific bounce back it eventually ended around 11050, registering a with loss of around half a percent against the previous week.
In our last week’s outlook, we had mentioned a confluence zone of support formed by ‘89-EMA’ on weekly chart , multi-month trend line support and 61.8 per cent retracement level of the key rally (10,004-12,103). This week, the index again managed to hold on to the dynamic support of above technical levels and hence the hope of relief rally remains intact. On the daily chart, we are witnessing a defined range with market participants baffled between the current scenario of global turmoil and the hopes of a government stimulus package. The said range between 11,180 and 10,900 will remain pivotal and the next directional move can only be seen on a range break from these levels. A break below 10,900 may push prices back to retest the recent low of 10,780 and further; whereas on the higher side, a relief towards 11,200 – 11,300 cannot be ruled out.
Traders are hence advised to keep a tab on the above levels and trade accordingly. The cement, metals and auto stocks which were in a slumber phase for a while performed well and they may continue their outperformance in the coming week.
View – Bullish
Last Close – Rs.363.05
In last couple of months, the entire metal space has taken a solid knock after the escalation of the trade war between two largest economies (US and china) in the world. In this course of action, ‘TATA STEEL’ corrected more than 20% and has reached the convergence point of various technical indicators and key Fibonacci ratios. Since the ‘RSI-Smoothened’ oscillator has the lowest reading after 2008, we saw first attempt of some respite in the week gone by. The weekly chart now depicts a ‘Dragonfly Doji’ pattern and a confirmation of the same would trigger a decent relief move in the counter. At this juncture, we would like to anticipate this possibility and hence, we recommend buying this counter for a target of Rs.385-400 over the next few days. The stop loss should be fixed at Rs.344.
View – Bullish
Last Close – Rs. 5975.05
Our strategy at this juncture would be to target few marquee names that have been correcting since last many months and have reached their crucial supports on higher degree time frame charts. This automobile giant is clearly one of them. Last week we saw confirmation of a ‘Bullish Hammer’ pattern formed around the golden ratio (161%) of the previous up move. This week also there were some encouraging moves seen from the intra-week lows and hence, we expect further relief in this counter. Traders can look to initiate longs for a target of Rs.6300 and the stop loss should be fixed at Rs.5750.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.
First Published: Mon, August 19 2019. 08:11 IST