Nifty holding on to key levels despite volatility: Angel Broking

Nifty Outlook 

Last week, the global markets went through severe pain as participants started to sense Donald Trump’s defeat in the upcoming US Presidential election. To rub salt on the wound, major European countries imposed lockdown due to the rising coronavirus cases. This resulted into a massive sell-off in developed markets, which had a rub off effect on our market as well. Right from the word go, we looked nervous; but fortunately the reaction was not as brutal as it is in the global peers. In fact, a reasonable recovery in the second half on Friday lifted markets higher in the safer territory above the 11,600-mark.  

As we all know, the volatility increases ahead of any major event and due to any uncertainty and since, rising volatility mostly makes the market a bit nervous, we tend to see some correction. Fortunately, in our market the damage was no way closer to the major global markets. In the midst of all volatile and uncertain behavior, we managed to defend key levels on a closing basis. We have been consistently mentioning the key support zone around 11,660 – 11,600 and on Friday, the same got breached due to volatility on an intraday basis. But as a technician, we give more weightage to a closing point; we can get a bit relaxed as the support remains very much intact. For this week, 11,500 – 11,600 has now become an important support zone; whereas on the higher side, if we have to regain any strength, the Nifty has to reclaim 11,760 – 11,800 levels, convincingly. Above this, we may again see the market resuming its northward trajectory. But as we are stepping into an eventful week, all eyes would be on all these developments, which may probably dictate the near-term direction. As of now, since important levels are still intact, we still remain hopeful.  

There were few individual pockets witnessed decent profit taking but among all, banking still shows some strength and held onto its key levels. So, any recovery from here on in benchmark, the financial space plays a vital role in it. Apart from this, the midcap index continues to show some resilience and we witnessed some interesting moves towards the end when key indices were feeling the heat. With continuation to the previous week’s view, another couple of percent move in the Midcap index would lead to a strong breakout in this universe. Let see how things pan out in the forthcoming week and hence, traders should stay light and keep a close tab on these developments.  

Stock recommendations: 

NSE Scrip Code – HDFC LIFE 

View  –   Bullish 

Last Close   –   Rs. 589.75 

Justification – After some profit booking in the recent past, the stock prices rested around the ‘200-SMA’ on the daily chart for quite some time. This week when our markets remained under pressure, this stock was clearly bucking the trend. So, it appears as if, after forming a decent base around its support zone, it is about to resume its higher degree up trend. The weekly chart looks extremely promising and hence, we expect the outperformance to continue in the forthcoming week as well. We recommend going long for a target of Rs.628 in coming weeks. The stop loss can be placed at Rs.578.  

NSE Scrip Code – PIDILITE 

View  –   Bullish 

Last Close  –  Rs. 1570.40 

Justification – This is considered as one of the most investors’ friendly stocks and is known for its steady and relentless Bull Run. However in this pandemic time, this stock did not give great move unlike the broader market. But, by no means, does this take away its credibility as we would interpret this period as a lull before the storm. In the week gone by, the stock prices finally managed to breakout from this long consolidation phase. This up move is backed by humongous volumes and thereby we expect the stock to continue its northward journey now. Hence, one can look to go long for a target of Rs.1,650 – 1,670 in coming days. The stop loss can be placed at Rs.1,512. 

Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.