Expect Nifty to trade near 10,700 levels in medium term: Devang Shah

Recommends buying Petronet LNG, Bata India, Inida Cements and Ashok Leyland

NIFTY - CLOSE-9520.90 (30.06.17) 
 
Market closed weekly in negative territory. It has broken crucial support of 9500 levels on nifty last week in expiry volatility. It made a low of 9448.75 levels on nifty & 30,680.66 levels during week. It still managed to hold crucial support of 40 DMA near 9500 levels on nifty at the end of weekly trading session as per chart attached. It still open case “ Whether its Correction or Extension?” from wave count perspectives as per chart attached but still I feel Dow Theory supports to watch out for finally conclude short term reversal in such kind of extending Bull market. One should strictly follow Short term trend till it reverses with revised stop loss levels And use such kind of decline or consolidation to BUY stock specific from medium to long term perspectives. 

 
Although Nifty/Sensex and Nifty Bank indices closed the month in negative territory at the end of monthly closing this month. Bears can argue of short trend reversal but I want to wait for Dow Theory support to break to finally conclude short term reversal. 
 

Short-term outlook for the market remains positive till Nifty trades above 9,340 levels and is expecting target of 9,850 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,327 levels and is expecting targets in the range of 10,300-10,700 levels in medium term. 
 
Nifty Bank also closed weekly & Monthly in negative territory. It’s also open case “Whether its correction or extension?” on bank Nifty as well, one should follow Dow Theory support/reversal levels to finally conclude short term reversal. 22,460 is crucial support/reversal levels for Bank nifty as per chart attached. 

 
9,400- 9,700 levels in strong support & Resistance levels respectively on Nifty based on derivative option open interest data so far for this month. Close below short term reversal levels will only lead to price wise correction in market in short term.
  
Therefore, risk reward is favorable to BUY at current levels till short term reverses. It may remain in this range of 9400-9700 levels for some more time before further trend established. 
 
Midcap and Smallcap indices closed monthly in positive territory. It still looks like medium term consolidation from wave count perspectives on these Indices. And its indicating market is going to go to much higher levels beyond anticipation in medium to long term. One should buy quality stocks from these segments in this correction. 

 
Momentum indicators Daily KST & daily MACD both are in sell ndicating weakness but one should wait for price reversal to conclude short term reversal till that one should be stock specific & follow the trend with trail stop loss levels till it reverses from trading perspectives. Close below short term reversal levels will lead to possible sharp correction till 9270/9000 levels on Nifty & 29,800/29,200 levels on Sensex in short term. 
 
Stock Picks:
  
BATA INDIA – BUY
CLOSE – Rs 536.30
TARGET – Rs 560
  
BATA closed the week in a positive territory. It looks like end of medium correction.  Its daily momentum indicators are in BUY. It also closed above 40 WEMA. Risk reward is favorable to buy at current levels. One can buy with a stop loss of Rs 510 for the target of 560 levels in short term.

  
ASHOK LEYLAND - BUY
CLOSE – Rs 93.85
TARGET – Rs 97-100
  
ASHOK LEYLAND closed weekly in positive territory. It’s outperforming in short term. It closed above 20 DMA. Risk reward is favorable to buy at current levels. One can buy with stop loss of 90 for the target of 97-100 in short term.
 
INDIA CEMENT - BUY
CLOSE – Rs 197.35
TARGET – Rs 208-218
  
India Cement closed weekly in negative territory. It managed to hold crucial support of 200 DMA. Risk reward is favorable to buy at current levels. One can buy with stop loss of 185 for the target of 208-218 in short term.

  
PETRONET LNG – BUY
CLOSE – Rs 430
TARGET – Rs 440-450
 
PETRONET closed daily in positive territory. It looks like end of medium term correction. It still holds support of 200 DMA. Risk reward is favorable to buy at current levels. One can buy with stop loss of 415 for the target of 440-450 in short term.
 
Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst
 
Disclaimer: The analyst may / may not have a position in the scrips mentioned above