Top trading ideas by Angel Broking: Buy Escorts, Sun TV

Stock calls and outlook on Nifty by Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking:

All’s well that ends well, hope to have a better 2019

After enjoying a good Bull Run throughout the year 2017, our markets underwent a lot of ups and downs in the calendar year 2018. Although there is one more day left for the year to conclude, we must say we are relatively in the safer zone, at least most of the uncertainty is behind us now. The truncated week did not have a good start as US markets were falling like a pack of cards. Somehow, post the Christmas day; index had a smart recovery from lower levels to conclude the week at a kissing distance of 10900.

Now, the million dollar question arises whether we will have the similar kind of year going forward or it would repeat 2017. In our sense, it’s still too far to make any kind of judgment on it and there is no clear signal on charts also to give some sort of hint towards it. There are lots of major events lined up and hence, it’s certainly going to be an action-packed year. At this juncture, it’s better to take one step at a time. Technically speaking, Wednesday’s recovery has occurred from a key Fibonacci ratio and it went on to form a ‘Piercing Line’ pattern on the daily chart. But what really encourages us is the overall price development in banking as well as midcap indices. We witnessed ‘Bullish Engulfing’ as well as ‘Perfect Upward Bar Reversal’ patterns in Bank Nifty on the same day, that too precisely at 50% retracement of the recent up move and around the pullback zone of ‘Downward Sloping Trend Line’. That certainly set the tone for the next leg of the rally and hence, if Nifty has to extend this up move, the banking index is likely to be a charioteer of the same. In addition, the midcap index is positively poised as we can see a good ‘Higher Top Higher Bottom’ formation; indicating participation from the broader end of the spectrum.

As far as levels are concerned, we could see acceleration in the ongoing optimism once Nifty surpasses 10900. In the scenario, we expect the index to head towards 11050 – 11200 in the forthcoming week. On the flipside, 10800 followed by 10764 are likely to be seen as key support levels. The ideal strategy for the coming week would be to keep a tab of mentioned levels and should concentrate more on the individual pockets within the midcap universe.

Stock recommendations:

1. NSE Scrip Code – Sun TV

View – Bullish

Last Close – Rs 615.30

Justification – This recent laggard has been hovering around the weekly ‘200 SMA’ since last three months. In the week gone by, we saw good buying emerging at lower levels and Friday’s massive bump up resulted in surpassing the swing high of 607 quite convincingly. This was supported by more than twice of its average daily volumes; providing credence to the move. We interpret this as a short-term trend reversal and thus, we recommend buying for a positional target of Rs.685 in coming days. The stop loss can be placed at Rs.583.

2. NSE Scrip Code – Escorts

View – Bullish

Last Close – Rs 701.85

Justification – Second half of the current calendar year has not been so great for this counter. It has already retraced its multi-year rally by more than 50% and is now showing some signs of revival. At least with a near-term view, we expect some good moves in the stock. Recently, daily 89 EMA acted as a sturdy wall; but looking at Friday’s move; we expect it to surpass in the forthcoming week. Hence, one can look to go long for a target of Rs.774 in coming days. The stop loss can be placed at Rs.689. 

Disclaimer: The analyst may have positions in any or all the stocks mentioned above.