Nifty outlook and four stock picks for today's trade by Devang Shah

NIFTY        

CLOSE-9653.60 (02.06.17)

Market extended its gain further and closed the fourth consecutive week in a positive territory, making a high of 9673.50 during the week and closing around these levels at the end of weekly trading session. It traded in a narrow range during the week. Broader market such as Midcap and Small cap indices also managed to found support at lower levels as expected last week. It sharply recovered from lower levels & closed the week in a positive territory. We will continue to see market to trend towards higher level targets as mentioned below in short to medium term. Market will remain volatile ahead of RBI policy next week.

From time cycle perspectives, it looks like the rally which started from beginning of January quarter is going to continue until June quarter as per the quarterly analysis. So bulls will dominate the entire month of June and Nifty will not go below 9,200 levels. We are going to see higher levels target as mentioned below in short to medium term. Any decline or short term consolidation is buying opportunity for short to medium term perspectives till trend reverses.

Short-term outlook for the market remains positive till Nifty trades above 9,269 levels and is expecting target of 9,850 levels in the short term. Medium term outlook for the market remains positive till Nifty trades above 8,327 and is expecting targets in the range of 10,300-10,700 levels in the medium term.

Nifty Bank extended gain further and closed the sixth consecutive week in a positive territory. 21,380 is strong support and reversal levels on Nifty Bank for the short term as long as it holds these levels, one can expect the index to head towards 23,500 or 25,200 levels in the short term. One can expect overall targets of 27,200 levels in the medium term.

Reiterating same thing once again that, Dow Theory is the only simple tool to help to ride such kind extended bull market rally. It worked well in the past as well, particularly in unchartered territory. Therefore, we do now expect major correction in the 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 markets rally beyond fundamentals.

9,400- 9,800 levels are the strong support and resistance levels, respectively on the Nifty based on derivative option open interest data for current month series. Any kind of short term correction or consolidation is buying opportunity for medium to long term investor. One can expect higher targets in the medium to long term.

Momentum indicators - Daily KST & daily MACD - are in buy supporting short term view. One should be stock specific, following 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 the Nifty & 29,259/29,137 levels on the Sensex in the short term.

Stock Picks:

ASHOK LEYLAND – BUY

CLOSE – Rs 92.80

TARGET – Rs 98-100

ASHOK LEYLAND closed the week in a positive territory. It is outperforming in the short term. It started its uptrend after end of short term consolidation. Its daily 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 87 for the target of Rs 98-100 in the short term.

Oracle Financial Services Software - BUY

CLOSE – Rs 3624.90

TARGET – Rs 3900-3980

OFSS closed the week in a positive territory. There appears the end of short term correction on the stock. It also closed above 40-WEMA. Risk reward is favourable to buy at current levels. One can buy with a stop loss of Rs 3,476 for the target of Rs 3,900-3,980 in the short term.

Tata Motors - BUY

CLOSE – Rs 478.55

TARGET – Rs 496-510

TATA MOTORS closed the week in a negative territory. It is outperforming in the short term. Its daily momentum indicators are in BUY. It still looks like wave-IV triangular consolidation on daily chart and wave-V up is still pending for higher levels targets in the short term. It closed above 20-DMA. Risk reward is favourable to buy at current levels. One can buy with a stop loss of Rs 458 for the target of Rs 496-510 in the short term.

ACC - BUY

CLOSE – Rs 1,644.45

TARGET – Rs 1,750-1,800

ACC closed the week in a positive territory. It looks like the end of short term wave-IV correction on the weekly chart. Its weekly momentum indicators are in buy. Risk reward is favourable to buy at current levels. One can buy with a stop loss of Rs 1,570 for the target of Rs 1,750-1,800 in the 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.