Nifty base shifts higher at 10,000: Sameet Chavan of Angel Broking

If there is no escalation in geopolitical concerns and Covid-19 cases, the Indian markets are likely to continue their northward trajectory

Nifty Outlook 

Base shifts higher at 10,000 in the midst of uncertainty 

Trading for the last week started with a downside gap on Monday as the second wave of coronavirus started haunting market participants across the globe. The sell-off extended to test the sub-9,750 levels. Somehow, we stabilized from this global negativity, but all of a sudden, on Tuesday, the news came out of a clash at the India-China border. Within no time, markets took a nosedive and remained under pressure for some time. Fortunately, once again we managed to defend key levels in the midst of all this uncertainty. But last two sessions turned out to be excellent for the bulls as we witnessed a good broad based rally to eventually conclude the week convincingly above the 10,200 mark. 

Since the last couple of weeks, 10,000 was acting as a sturdy wall. Due to smart rally towards the fag end of the week, we finally managed to traverse this barrier and headed towards recent highs. It is always good to see when a rally is mainly propelled by the banking conglomerates; because it generally provides credence to the move. Looking at Friday’s close, the set-up overall looks good, and, ideally, we should make a move beyond our recent highs of 10,350-10,400 to test higher levels of 10,600-10,800 in the forthcoming week. But the threat of the second wave of pandemic and the geopolitical concerns are likely to loom over us now for some time. Hence, if there is no escalation with respect to this, our markets are likely to continue this northward trajectory. 

As far as supports are concerned, 10,100 followed by 10,000 would be seen as immediate support zone. Now, the base seems to have shifted higher from 9,700 to 10,000 and here a breach of 10,000 would again apply brakes on the optimism. Looking at the broader market participation last week, traders need to keep focusing on individual stocks. 

Stock recommendations: 

1.  NSE Scrip Code – BAJAJ FINSERV 

View  –   Bullish 

Last Close   –   Rs. 5,899.80 

Justification – In the last couple of days, la ot of beaten NBFC stocks gave a smart move and this stock is clearly one of them. Post the March month substantial drop; this marquee name went into a consolidation mode, which can now be termed as a base building process. On Friday, the stock price finally managed to surpass the multiple resistance zone around 5,500-5,550, which eventually confirmed a ‘Bullish Flag’ pattern. Most importantly, this move is backed by humongous volumes, providing credibility to the surge. The way charts are shaped up; we expect the stock to participate heavily in the next leg of the rally. Thus, we recommend going long on a decline around 5,800-5,750 for a positional target of Rs.6,200-6,400 in coming days. The stop loss can be placed at Rs.5,330.
  

2.  NSE Scrip Code – FSL 

View  –   Bullish 

Last Close   –   Rs. 39.95 

Justification – After twice facing resistance around the 39.90 levels in the last two months; the stock prices have finally broken above the key resistance confirming a ‘Cup N Handle’ bullish breakout. The recent leg of strong up move is also supported by strong volumes and it also resembles a strong continuation pattern known as ‘Flag’. In addition, prices have also closed above 200SMA which previously acted as resistance and now indicates a change in polarity. Moreover, momentum oscillator i.e. RSI is in positive zone supporting our bullish stance. Thus, one can look to buy on minor dips for a target of Rs.44 in coming weeks. The stop loss can be placed at Rs.38.  

Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking Ltd. Views are personal.