Nifty outlook and trading ideas by Sameet Chavan of Angel Broking

Markets clearly shrugged off mixed global cues early last week but did not add significant gains. Throughout the first half of the week, our markets traded positively to once again challenge the all-time high. However on the weekly expiry day, markets had a rough day which was mainly on the back of the negative development across the globe. Fortunately, the fall got arrested in the vicinity of the support zone to eventually conclude the week tad below 15,700. 
 

In the last one month or so, we have seen multiple attempts to reach the millstone of 16,000 but markets are clearly struggling as something or other appears from nowhere to dampen the sentiments. The way we closed on Wednesday (July 7), we were all set to see the magical figure; but global sell off became the spoilsport on this occasion. Fortunately there was no follow through to this selling momentum as we saw Nifty stabilizing after entering the key support zone of 15,650 – 15,600. Honestly when market fails to surpass a specific level after the multiple attempts, it is considered as an ominous sign.

But fortunately there has not been any brutal correction seen so far, which bodes well for the bulls. After last Thursday and Friday's price action, our confidence of predicting Nifty towards 16,000 or beyond in the ongoing leg has certainly shaken a bit; but we would still remain hopeful as long as Nifty holds a strong support zone of 15,600 – 15,450. If these levels are violated then one should get prepared for a decent short term correction in the market. Until then, better to trade with a positive bias. 
 

During the first half of this week, 15,750 – 15,800 are the levels to watch out for and the first of sign of strength would come only after reclaiming 15,800 on a closing basis. We reiterate that, if this has to happen, the banking continues to be the key factor as it’s trading around its crucial support area. Traders are advised to remain light and stick to stock centric approach by following strict stop losses. Also, it’s important to keep a close eye on the global developments as well which is likely to set the tone for the forthcoming week.  

Stock picks:

NSE Scrip Code – TATA METALIKS

View – Bullish

Last Close – Rs. 1194.65

The entire ‘TATA Group’ has done exceedingly well over the past fifteen months and TATA METALIKS despite being a small cap constituent, has not disappointed at all. It has already given four-fold returns in this period and still it’s not done yet. Recently, the stock prices slipped into a consolidation mode after registering a new high in the early part of May. On Friday, we witnessed a good positive traction throughout the session, which resulted in a convincing breakout from the consolidation range. Since the price action is accompanied by the sizable volumes, we recommend buying for a short term target of Rs.1308. The stop loss can be placed at Rs.1127.

NSE Scrip Code – SUTLEJ TEXTILES
 

View – Bullish

Last Close – Rs. 63.25

Most of the textile counters have been steady movers in last few months. This sub-100 ticket size counter has marched northwards with series of higher highs and higher lows in its entire journey. In fact, if we look at the daily time frame chart, we can observe a typical price pattern where the stock prices suddenly takes a leap and then consolidates for some time. Again the breakout happens from the range and similar sort of price action is repeated. On Friday, we witnessed a fresh breakout from the congestion phase and considering its recent pattern, we recommend buying on a decline for a short term price target of Rs.70. The stop loss needs to be maintained at Rs.58.40.

=============================
Disclaimer: Sameet Chavan is Chief Analyst - Technical & Derivatives at Angel Broking. The analyst doesn't have positions in any of the stocks. Views are personal.