Nifty outlook and top stock picks by Angel Broking; Buy Raymond, HSIL

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

Market cheers second reign for PM Modi; finally party begins for mid and small caps
 

This has been a splendid week for our market and the kind of comeback we made, is quite remarkable. Notably, the global markets had no influence over it as the rally was mainly led by the domestic factors. This all started with a massive bump up at the opening on Monday after exit polls indicated the BJP led NDA government would come back to power with thumping majority. This was followed by couple of muted sessions ahead of the final verdict. On the actual day, we saw tremendous optimism to reach yet another milestone of 12,000 as the counting finally validated the exit poll numbers.
 

However, the index suddenly took a nosedive and before anyone could realize, we were well off highs. Fortunately, the concluding session brought back cheerful mood across the board to reclaim the 11,800 mark.
 

Last week, only the first and the last day of the week had some notable development. On the event day, there was massive volatility with wild swings being witnessed. We are back to comfortable zone now; courtesy to Friday’s spectacular upsurge. This move was crucial for our market as it negated the possibility of forming a ‘Shooting Star’ pattern on weekly chart, which would have probably turned ominous if we had a close below 11,750 – 11,700. Going ahead, Monday’s gap area of 11,591.70 – 11,426.15 is now likely to act as a sheet anchor and we do not expect Nifty to go below this in the near future. Since, we have confirmed a breakout on ‘Line chart’ in weekly time frame, we expect Nifty to reach and even go beyond the 12,000 mark quite soon.  
 

Last week, we had clearly stated about the ‘Midcap’ index which was in a last phase of its time as well as price wise correction. We have already seen a good leap from lows and expect further legs to unfold, which will eventually bring back the wider smile on many investors’ faces. Going ahead, we may not see the similar kind of outperformance from previous index drivers and the focus is now likely to shift on mid and small cap universe as we expect the party to begin after a long underperformance.
 

Stock Recommendations:
 

HSIL
 

View –   Bullish
 

Last Close –   Rs. 286.85
 

Justification – After a slumber phase for more than a year for the midcap and small cap basket, the tide now seems to have turned upwards. This stock after forming a base in the recent past has now broken above the recent consolidation and is now gearing up for a strong upward rally in the near term. The said breakout from consolidation is supported with good increase in volume and strong positive candle. In addition, momentum oscillator i.e. RSI is in positive zone supporting the optimistic view. Thus, we recommend buying at current levels for a target of Rs.317 and the stop loss should be fixed at Rs.269.40. 
 

Raymond
 

View –   Bullish
 

Last Close –   Rs. 852.20
 

Justification – Recently, we witnessed a sheer outperformance from this traders’ favorite high beta mid cap name. Stock remained sideways with no real participation in the broader market destruction. Today, when midcap universe started showing signs of revival, this stock showed its supremacy by clocking colossal move to surpass its recent congestion zone convincingly. Looking at the volume activity and other trend following indicators which are pointing upwards, we expect the stock to give decent move in days to come. We recommend buying at current levels for a target of Rs.938 and the stop loss should be fixed at Rs.804.

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Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.