Short-term outlook for the market remains positive; Buy HDFC Bank, Cummins

NIFTY      

LAST CLOSE- 11,754.65 

Market closed, marginally, in the negative territory during the past week, consolidating within a narrow range. The consolidation has been in the range of 11,550-11,800 levels for the entire month of April after a sharp surge was seen in the month of March. The broader index has touched a high of 11,856.20 levels on Nifty so far during this rally. There is a high possibility of “wave-III of 5 extension case” in the short term towards a revised higher level target. 11,300 is another strong support on Nifty in the near term. Any kind of decline or consolidation is a buying opportunity till short term reverses. 

Short-term outlook for the market remains positive till Nifty trades above 10,940 levels with expected targets in the range of 12,300-12,500 levels in short term. Similarly, medium term outlook for the market remains positive till Nifty trades above 9,951 levels with expected targets in the range of 12,800-13,200 levels in medium term.

Midcap & small-cap indices closed in the negative territory on a weekly basis, consolidating within a narrow range. In the short term, they have underperformed relative to benchmark indices (Nifty/Sensex and Nifty Bank). They have to catch up in order to confirm the overall trend of the market. One should closely watch broader market behavior in the coming weeks, at current levels of market, ahead of the election outcome. There is a high possibility that this divergence will end at the recent bottom and we will get broader market rally for higher level targets in short to medium term from now onwards. Eventually, midcap and small-cap indices are likely to touch all-time-high during this calendar year. Risk reward is favourable to stock specific buying at current levels of market.

Nifty Bank also closed, marginally, in the negative territory, consolidating within the narrow range for the past week. It has made a high of 30,915.70 levels so far in this rally. It has consolidated in the range of 30,700-29,400 levels for entire month of April after rallying sharply during March.  It also looks like “wave-III of 5 extension case” for the index in the short term. If the index manages to hold 27,000, one can expect higher level targets of 32,500 level in short term. Levels of 29,200-29,400 also are strong support zone for bank nifty for short term. Any kind of decline or consolidation is buying opportunity till short term reverses. From the medium term perspective, 23,600 level will be strong support. If it holds that, one can expect higher level targets in the range of 34,000 level.

11,000/11,500 and 12,000 level respectively will be strong support and resistance level for the index based on option open interest data for current month series. Any kind of such short term correction or consolidation is stock specific buying opportunity from medium to long term investment perspectives till medium term reverses. Market is expected to remain volatile ahead of the 2019 Lok Sabha election outcome later this month.

Momentum indicators Daily KST and MACD, both, are in “sell” indicating volatility in the short term. One should be stock specific and follow the trend with trail stop loss levels till the trend reverses. Risk reward is favourable to “buy” at the current levels of the market. Close below short term reversal level will lead to sharp correction on Nifty and Sensex to touch 10,300 and 34,400 level respectively in the near term.

Stock Picks:

HDFC BANK– BUY
 

CLOSE – Rs 2,267.20
 

TARGET – Rs 2,350/Rs 2,400
 

The stock closed in the negative territory on the weekly basis, consolidating in narrow range for short term. It has managed to hold crucial support of 40 DMA. The risk reward and weekly momentum indicators are favoring “buy” at current levels. The stock can be bought with a stop loss of Rs 2,210 for the target of Rs 2,350/Rs 2,400 levels in short term.  
 

JSW STEEL – BUY
 

CLOSE – Rs 294.05
 

TARGET – Rs 305/310
 

The stock closed in positive territory on a weekly basis, consolidating in narrow range for short term. It has managed to hold crucial support of 20 DMA. The risk reward and weekly momentum indicators for this stock are indicating “buy” at current levels. One can buy with a stop loss of Rs 286 for the target of Rs 305/Rs 310 levels in short term.
 

TATA GLOBAL – BUY
 

CLOSE – Rs 213.35
 

TARGET – Rs 220/230
 

The stock consolidated within a narrow range to end within the positive territory during the past week. Its closed above 20 DMA. The risk reward and weekly momentum indicators favour “buy” at current levels. One can buy with a stop loss of Rs 200 for the target of Rs 220/Rs 230 levels in short term.
 

CUMMINS – BUY
 

CLOSE – Rs 745
 

TARGET – Rs 775/Rs 810
 

The stock closed in the positive territory, consolidating within narrow range, during the last week. Its closed above 20 DMA. The weekly momentum indicators and risk reward favour “buy” at current levels. One can buy with a stop loss of Rs 708 for the target of Rs 775/Rs 810 levels in 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.