Nifty outlook and stock pick by Angel Broking: Buy SBI Life, Sudarshan Chem

Stock calls and Outlook on Nifty by Mr. Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking Ltd.

Market extends gains but momentum seems to have disappeared
 

On September 20, market took a giant leap after FM’s announcement on slashing corporation taxes. All of a sudden, the tide turned upwards and before anyone could realise, the Nifty was well above 11,200. Since it was predominantly a short squeezing move, markets were not done with such sharp one day spurt. Expectedly, we had a good bump up on Monday to kick start the week on a strong note. Participants were so ecstatic; the Nifty went on to almost kiss the 11,700 mark in the initial euphoric move. However, this seemed to be an overreaction and hence, throughout the remaining part of the week, market consolidated in a slender range to eventually conclude tad above 11,500.
 

Practically speaking, Nifty soared 1,000 points in merely two days and one has to understand, it is very seldom to see such colossal move in a quick succession. So, to bring the market sentiments back to the equilibrium, we either had to see natural profit booking or had to spend some time in a range. As of now, market seemed to have opted for the second choice and hence, we consolidated after Monday’s bump up. Now, the low hanging fruit or the easy money is already gone at least for traders. We are likely to witness such choppy moves now and hence, one needs to be very selective while picking up a stock. Yes, the directional bias remains positive as long as we are above the 11,200 mark.

Meanwhile, any dip should be construed as a buying opportunity. The immediate range can now be seen at 11,400 – 11,700 and it’s advisable to stay light in this band. However, having said that, it’s a matter of time, we expect index coming out of it very soon and more importantly in the upward direction. In this scenario, the next levels to watch out for would be around 11,900 – 12,000.

Traders are advised to keep a tab of all the above mentioned levels and should focus on individual stocks that are likely to provide better trading opportunities. The actual momentum will now trigger only above 11,650 – 11,700, which will attract lot of participants who are still waiting on the side lines. 

NSE Code – SUDARSCHEM
 

View –   Bullish
 

Last Close –   Rs.375.60

On the weekly chart, the stock prices after oscillating within a range of 300 – 360 for the last few months have broken the range on the upside, confirming a bullish breakout. The said breakout is witnessed with a good increase in volume. In addition, prices have closed above all the major moving averages i.e. 50DMA, 100DMA and 200DMA which indicate overall bullishness in the counter. For the last few weeks, midcap stocks are providing impressive moves and the above technical setup suggests that this stock is gearing up for a strong move in the near term. We recommend buying this counter for a target of Rs.430 over the next few days. The stop loss should be fixed at Rs.345. 
 

NSE Code – SBILIFE
 

View –   Bullish
 

Last Close –   Rs. 842.50
 

This stock is in a strong uptrend continuously moving in a ‘Higher Top Higher Bottom’ price formation. On the daily chart after making an all-time high at 862 levels the stock prices witnessed a time wise correction as the oscillators were in deep overbought territory. The said correction is healthy for an overall uptrend and the prices seem to have now resumed the uptrend by breaking above the recent consolidation. In addition, RSI the momentum oscillator after the initial dip from the overbought zone has again started moving northward suggesting fresh leg of up move in the near term. Going with all the above evidences we recommend buying this stock at current levels for a target of Rs.927 over the next few days. The stop loss can be placed at 794.

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Disclaimer: Views expressed are the author's own. He may have positions in one or all of the above mentioned stocks.