Short-term outlook for the market remains negative: Devang Shah

Nifty outlook and top trading ideas by Devang Shah for Monday

NIFTY     
CLOSE- 10458.35 (01.03.2018)
 
Market closed weekly in negative territory. It has completed short term pull back rally as expected last week. It made a high of 10,631.35 levels on nifty so far in this pull back rally. It looks like end of pull back rally till recent high as mentioned above is surpassed & it looks like completion of right shoulder & begging of fresh round of selling in this wave-IV correction. Nifty has strong support around 10300-10276 levels to watch out for in short term, below which we can see sharp sell off towards lower levels targets as mentioned below in short term. Its mainly trading in short term rang of 10300-10650 levels on nifty, break of this range at either of side will lead to sharp trend with momentum in short term.

 
Its forming Right shoulder of Head & shoulder pattern on this wave-IV correction as per overall medium term wave count chart. It looks like wave-X pull back rally with Right shoulder formation till short term reverses. we can see further lower levels targets as mentioned below in this wave-IV correction till lower end of channel before final bottoming out in short term.

 
Short-term outlook for the market remains negative till Nifty trades below 11172 levels and expecting target of 10000-9800 levels in short term. Medium term outlook for the market remains positive till Nifty trades above 8,968 levels and expecting targets in the range of 12000-12200 levels in medium term.

 
It looks like time-wise wave-IV correction & will last it at least till March end before final wave-V UP begins as per my expectation. Any kind of such short term correction or consolidation is buying opportunity for medium to long term Investment perspectives till medium term reverses.
 
Nifty Bank also closed weekly in negative territory. Its relatively more under-performing then other indices. It made a high of 25,780 levels so far in this pull back rally. It looks like end of pull back rally with completion of right shoulder in this head & shoulder wave-IV correction pattern form overall wave count perspectives. One can expect lower levels targets till 24,000-23,600 levels in this correction till it trades below 26,200 levels in short term.

 
10,300-10,000 & 10,700-11,000 levels is strong support & resistance levels respectively based on option open interest data so far for this month series. Market will remain very volatile in this corrective phase.
 
Momentum indicators Daily KST are in BUY while daily MACD are still in sell supporting short term trend. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close above short term reversal levels will finally confirm further rally towards medium term higher levels targets.
 
Stock Picks:
 
AURO PHARMA - BUY
CLOSE – Rs 622.50
TARGET – Rs 650/665

 
AURO PHARMA closed weekly in positive territory. It looks like end of medium term correction. It’s trading above 20 DMA. Its daily momentum indicators are in BUY. One can BUY with stop loss of 596 for the target of 650/665 levels in short term.
 
IOC- BUY
CLOSE – Rs- 382
TARGET – Rs 400/410
 
IOC closed weekly in positive territory. It’s outperforming in short term. Its daily momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs 363 for the target of Rs 400/410 levels in short-term.

 
CASTROL- BUY
CLOSE – Rs- 200
TARGET – Rs 217/225
 
Castrol closed the weekly in positive territory. It managed to hold crucial support of 20 DMA. Its daily momentum indicators are in BUY. Risk Reward is favourable to BUY at current levels. One can buy with a stop loss of Rs 188  for the target of Rs 217/225  levels in short-term.
 
DHFL- BUY
CLOSE – Rs-535
TARGET – Rs 565/575
 
DHFL closed the weekly in negative territory. Its outperforming in short term. This short term correction is buying opportunity for medium term perspectives. Its daily momentum indicators are in BUY. Risk Reward is favourable to BUY at current levels. One can buy with a stop loss of Rs 495  for the target of Rs 565/575  levels in short-term.

 
Disclaimer: The analyst may / may not have a position in the scrips mentioned above