Nifty placed at a crucial juncture: Sameet Chavan of Angel Broking

Nifty Outlook 

It has been a roller coaster ride for our markets in the last couple of weeks. First, the September expiry panned out at the lowest point of the series and from the next session, immediately, the markets started rebounding sharply. The same momentum carried over to last week to head towards 11,300 first. In the midst, Nifty looked a bit tentative around it, but, on Thursday, it just blew out to reclaim 11,400 convincingly. 

In the last five sessions, markets almost had a V-shaped recovery, and, within no time, we are off last Thursday’s lows more than 600 points, which is remarkable. This rally was mainly triggered by strong positive cues from the global peers and there was no negative development on the domestic front. Honestly speaking, this sharp-up move has surprised us to some extent, especially the upsurge on Thursday to surpass the barrier of 11,300. Markets are superior and there is no harm accepting the miss. Now, we are standing at a crucial juncture, where we can see a converging point of two important trend lines. If we connect recent swings highs and swing lows, two trend lines are converging around 11,475-11,550. If these levels are taken out, this will certainly negate the bearish stance and then the indies can head higher. But till the time it doesn't cross this level convincingly, we are still not completely out of the woods.  

So, the first half of this week would be crucial as it would decide the next path of action for our market. On the lower side, 11,300-11,180 has now become an immediate support zone. The weakness will get confirmed only below these points. Last week, banking made a spectacular comeback and it’s very vital in determining the trend of the markets in the near-term. Traders are advised to keep a note of all the mentioned levels and create aggressive bets only after the confirmation of any of the above scenarios. 

Stock recommendations: 

NSE Scrip Code – AUROPHARMA 

View – Bullish 

Last Close – Rs. 818.65 

Justification – PHARMA has been the flavor in the pandemic times and after intermittent brief pauses, stocks tend to resume the higher degree uptrend. AUROPHARMA has been quiet for a while since August highs. It rested and consolidated around the ’89-EMA’ on daily chart. But now, looking at last week’s price action, the stock looks very much poised for an upside thrust. The ‘RSI-Smoothened’ oscillator on the daily chart has confirmed a bullish crossover and is pointing northwards, which may provide impetus to the upside rally. We recommend going long for a target of Rs.860-875 in the coming days. The stop-loss can be placed at Rs.791.

NSE Scrip Code – BPCL 

View  –   Bearish 

Last Close – Rs. 353.30 

Justification – Post the stellar move in mid-July, this stock price has lost its spark and thereafter has kept grinding lower in a gradual manner. After spending a lot of time around ‘200-SMA’, the stock showed some sign of revival; but, it eventually got sold into. In the last couple of sessions, the stock price nosedived after breaching key support area around 390-380. In this course of action, it is back to its May levels and the way charts are shaped up, we expect further downside in coming days. Hence, momentum traders can look to sell on a bounce around 360 for a target of Rs.335 in coming weeks. The strict stop-loss can be placed at Rs.374.

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