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

The short-term outlook for the market remains positive till Nifty trades above 10,417 levels and expecting targets in the range of 10,900-11,000 levels in short-term, says Devang Shah.

NIFTY      

CLOSE- 10,772.65 (06.07.2018)

The market closed at the upper end of the range near the breakout levels at the end of the weekly trading session. It closed weekly in positive territory. It made a high of 10,816.40 levels & 35,799.71 levels during the week. Its still consolidating in the broad range of 10,400-10,900 levels from past one & half month. Break of these ranges will only lead to a strong trend in the market for higher levels targets as mentioned below in short to medium term.

It looks like wave-II of 5 of consolidation. If we have completed FLAT correction then, we can see high probability to break this range on the upside in coming weeks. Failing to break this range on the upside in coming trading session will open up a possibility of a triangular formation & we may further re-test lower end of range before final wave-III of 5 begins.

The short-term outlook for the market remains positive till Nifty trades above 10,417 levels and expecting targets in the range of 10,900-11,000 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 12,000-12,200 levels in the medium term.

It still looks like wave-II of (5) consolidation phase on main indices Nifty/Sensex as per chart attached. There is a strong divergence between Nifty/Sensex main indices & Broader Market in short-term from the last couple of months. And we have seen a sharp sell-off, particularly in the broader market in near term. I feel this divergence is going to end soon, once we break out of this short-term range on main indices. And we will see a strong rebound in the broader market. This correction is an opportunity to BUY quality beaten down stocks of midcap & small cap index from medium to long-term perspectives. All these broader market indices such as midcap & small cap are trading at very crucial support zone as per chart attached.

BANK NIFTY closed weekly in positive territory. Its consolidating in a narrow range between 27,000-25,550 levels in near term. 25,550 level is strong support for bank nifty for short term, till it holds one can expect higher levels targets till 27,700 levels in short-term & further above 29,600-30,000 levels in the medium term. Any kind of decline is also buying opportunity for bank nifty for short to medium term perspectives. 

10,600 & 11,000 levels are strong support & resistance levels based on option open interest data for current month series expiry perspectives. By looking at current structure, I feel the market is going to surpass all time high soon on main indices & this rally will have time wise consolidation rather than price wise correction in short term. Any kind of such short-term correction or consolidation is buying opportunity for medium to long-term Investment perspectives till medium term reverses.

Momentum indicators Daily KST & DAILY MACD both are in BUY supporting the short-term trend. One should be stock specific & follow the trend with trail stop loss levels till it reverses. Close below short-term reversal levels will lead to sharp correction till 10,300-10,200 levels on nifty & 33,600 levels on Sensex in short term.

Stock Picks: 

M&M- BUY

CLOSE– Rs 925

TARGET– Rs 945-965
 

M&M closed the weekly in positive territory. Its outperforming in short term. Its broken out of short-term consolidation. Its daily momentum indicators are in BUY. Risk reward is favorable to BUY at current levels. One can BUY with a stop loss of Rs-880 for the target of Rs-945-965 levels in short-term. 

GRANULES INDIA- BUY

CLOSE– Rs 82.80

TARGET– Rs 88-92

GRANULES INDIA closed the weekly in positive territory. It looks like the end of short-term correction. 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-76 for the target of Rs 88-92 levels in short-term. 

L&T- BUY

CLOSE– Rs 1,267

TARGET– Rs 1,320-1,350
 

L&T closed the weekly in negative territory. It consolidated in a narrow range for the week.  Risk reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs 1,205 for the target of Rs 1,320-1,350 levels in short-term. 

L&T FIN- BUY

CLOSE– Rs 149.15

TARGET– Rs 155-160

L&T FIN closed the weekly in negative territory. Its trading near medium term important support levels. Risk Reward is favourable to BUY at current levels. One can BUY with a stop loss of Rs-144 for the target of Rs-155-160 levels in short-term. 

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

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