Nifty can hit 9,850 in the short term, says Devang Shah

Recommends buying Vedanta, Tata Motors, Granules India and ACC

NIFTY: CLOSE- 9427.90 (19.05.17)
 
Market extended further on upside & achieved short term targets levels as expected last week. It witnessed profit booking after achieving short term targets levels from higher levels. It made a high of 9,532.60 levels so far in this rally. It also closed 2nd consecutive week in positive territory. It looks like further extension of rally from here on in short term till Dow Theory supports holds as mentioned many times in my earlier outlook.
 
We have seen sharp profit booking esp. midcap & smallcap stocks from higher levels during this week while large cap indices such as Nifty, Sensex and Nifty Bank remained flat & witnessed time-wise consolidation, its sign of extension of rally from here on across the board & just change in hand in stocks or pause in midcap & small cap stocks. TOP never forms with first unwinding in broader market so we are still away from Major TOP & expecting rally to continue further one sided towards revised short to medium term targets levels till trend reverses. Midcap & Small cap indices closed weekly in negative territory while main indices such as Nifty, Sensex, Nifty Bank closed weekly in positive territory.

 

Short-term outlook for the market remains positive till Nifty trades above 9,269 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 is also showing sign of extension on upside as mentioned earlier. It consolidated in narrow range for the entire week. 21,380 is strong support on Nifty Bank as per chart attached till it holds one can expect higher levels taregt1-23,500 & target 25,200 levels in short term. One can expect overall targets of 27,200 levels in medium term.

 
Dow Theory is the only simple tool to help to ride such kind extended bull market rally. It worked well in past as well as per chart attached particularly in unchartered territory. Therefore, not to expect major correction in short term till Dow Theory supports hold. We may possibly extend more for couple of months till medium term targets levels without any major correction in such kind of liquidly driven extended bull market rally beyond fundamentals.
 
9,300- 9,500 levels in strong support & Resistance levels respectively on nifty based on derivative option open interest data for current month series. It may remain within this range ahead of expiry next week before any kind of directional break out. Any kind of short term correction or consolidation is buying opportunity for medium to long term investor. One can expect higher levels targets in medium to long term.

 
Momentum indicators Daily KST & daily MACD both are in buy supporting short term view. 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 9,075/9,000 levels on Nifty & 29,259/29,137 levels on Sensex in short term.
 
Stock Picks:
 
ACC -BUY
CLOSE – Rs 1,679
TARGET – Rs 750
 
ACC closed the week in a positive territory. It’s outperforming in short term. Its weekly momentum indicators are in BUY. It also closed above 20 DMA. Risk reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs-1600 for the target of 1750 levels in short term.

 
TATA MOTORS - BUY
CLOSE – Rs 443
TARGET – Rs 460-470
 
TATA MOTORS closed the week in a positive territory. It’s outperforming in short term. Its weekly momentum indicators are in BUY. It also closed above 20 DMA. Risk reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs-417 for the target of 460-470 levels in short term.
 
VEDANTA - BUY
CLOSE – Rs 230.35
TARGET – Rs 250
 
VEDANTA is outperforming in short term. Its looks like end of short term correction.  Its Daily momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with SL-219 for the target of 250 in short term.

 
GRANULES INDIA - BUY
CLOSE - Rs 148.75
TARGET - Rs 155-160         
 
GRANULES INDIA closed weekly in positive territory. It’s outperforming in short term. Its daily momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with SL-140 for the target of 155-160 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; the views given above are the personal views of the analyst.