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

Market outlook and top trading ideas by independent market analyst Devang Shah

NIFTY      
CLOSE- 11724.10  (21.06. 2019)
 
Market closed third consecutive week in the negative territory. It consolidated in a narrow range of 11,850-11,600 levels on Nifty owing to time-wise correction as expected. Its looks like market will consolidate/correct first before heading towards higher levels in the medium term till short term reverses.
 
There is a possibility of End of 5 wave advance from bottom of October 2018 on the main indices such as Nifty/Sensex and Bank Nifty. It looks like some price-wise correction for lower levels till lower end of the channel in short term before heading towards higher levels in medium term.

 

Short-term outlook for the market remains negative till Nifty trades below 12,103 and the expected target for the index in short term is in the range of 11,500-11,300 levels. Medium-term outlook for the market remains positive till Nifty trades above 9,951 levels. We expect it to trade in the range of 12,800-13,200 levels in medium term.
 
Broader market such as midcap and small cap indices is still underperforming at a time when main indices such as Nifty/Sensex and Bank Nifty are hitting all-time high levels. It’s not a good sign for market. It’s now almost one and half years that we have seen divergence between main indices and broader market. I am anticipating these divergences to end soon.  It’s a warning sign for market at current levels. It has to catch up and participate now for my overall medium-to-long term bullish trend of market. One should closely watch out broader market behavior at current levels of market.

 
BANK NIFTY closed weekly in positive territory. It has shown a loss of momentum after achieving my short term targets levels. It made a high of 31,816 levels. It looks like the index will correct first till short-term reverses before heading towards higher levels in the medium term. One can expect it to correct to 29,100-29,000 levels first till these recent high gets surpassed. 23,600 is the strong support for the medium-term perspectives. Till it holds the level, one can expect higher targets in the range of 34,000 on medium term. Any kind of decline or consolidation is buying opportunity from medium term perspectives. On the other hand, it can consolidate between 29,000-31,000 levels in short term as time-wise consolidation before heading towards higher levels targets in medium term.

 
11,500 and 12,000 levels are strong support and resistance levels, respectively based on option open interest (OI) data for expiry perspectives next week. Any kind of such short-term correction or consolidation is buying opportunity in specific stocks for medium-to-long term investment perspectives till medium term reverses.
 
Momentum indicators Daily KST & DAILY MACD both are in SELL supporting short-term trend of market. One should be stock specific and follow the trend with trail stop loss levels till it reverses. A close above the short-term reversal levels will finally confirm trend towards further higher levels targets in medium term.

 
Stock Picks:
 
L&T – BUY

CLOSE – Rs 1,542

TARGET – Rs 1,580-1,610

L&T closed the week in a positive territory. It’s outperforming in short term. it has still Wave-V Up pending on monthly chart. Its weekly momentum indicators are in BUY. It also closed above 20-day moving average (DMA). Risk reward is favorable to buy at current levels. One can buy with a stop loss of Rs 1,470 for the target of Rs 1,580 – Rs 1,610 levels in short term.

BEL – BUY

CLOSE – Rs 111.45

TARGET – Rs 116-120

BEL closed the week in a positive territory. It’s outperforming in short term. Its weekly momentum indicators are in BUY. It also closed above 20-DMA. Risk reward is favorable to buy at current levels. One can buy with a stop loss of Rs 102 for the target of Rs 116 – Rs 120 levels in the short term.

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Devang Shah: The author of www.trendtechno.com (Trade with Trend) and an independent market analyst.

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