Weekly market outlook and two stock recommendations by Devang Shah

The short-term outlook for the market remains positive till Nifty trades above 10,940 levels.

NIFTY      

CLOSE- 11870.65  (07.06. 2019)

Market closed the week in the negative territory. It witnessed profit booking from higher levels. It made high of 12,103.05 levels during the week. One needs to watch out market behavior at these crucial levels. We may see market to consolidate in a narrow range of 11,500-12,100 levels in short term till these recent high gets surpassed. Close and sustenance above these levels will finally confirm trend towards further higher level targets as mentioned below in short- to-medium term. 

Short-term wave count structure is still not conclusive but we may see some time-wise or price-wise consolidation for short term that may provide some room for beaten down midcaps and small cap stocks to outperform. Although one can’t rule out stock specific action but any kind of decline or consolidation is buying opportunity in specific stocks till short term reverses. 

Short-term outlook for the market remains positive till Nifty trades above 10,940 levels and we are expecting targets in the range of 12,300-12,450 levels in short term. Medium-term outlook for the market remains positive till Nifty trades above 9,951 levels and we expect targets in the range of 12,800-13,200 levels.

Midcap and small-cap indices closed the week in negative territory. It is still underperforming at current levels of market.  It has to catch up now for further confirmation of overall trend of the market. One should closely watch out broader market behavior in coming weeks at current levels. Risk reward is favorable to buy specific stocks at the current levels. 

Bank Nifty also closed the week in negative territory. It has also consolidated in narrow range with a high volatility for the week. It made a high of 31,815.50 levels. Close and sustenance above these levels will finally confirm trend towards further higher targets as mentioned below in short-to-medium-term. 

We may see some time-wise or price-wise consolidation for short term. 28,570 level is strong support for the short term; till it holds on to it, one can expect higher targets till 32,900 in short term. Any kind of decline or consolidation is buying opportunity till short term reverses. 

23,600 level is strong support for medium-term perspective; till it holds the level, one can expect higher targets in the range of 34,000 levels on medium-term perspective.

11,500 and 12,000 levels are strong support and resistance levels, respectively based on option open interest (OI) data for expiry perspective next week. We may see market consolidate in this price range for short term. Any kind of such short-term correction or consolidation is buying opportunity in specific stocks for medium-to-long-term investment perspective till medium term reverses. 

Momentum indicators Daily KST went in to ‘sell’ but DAILY MACD are still in ‘buy’ indicating volatile trend in short term. One should adopt stock specific approach and follow the trend with trail stop loss levels till it reverses. Risk reward is favorable to ‘buy’ at current levels of market. Close below short term reversal levels will lead to a sharp correction till 10,800/10,400 levels on Nifty in short term.

Stock Picks:

BEL: BUY

CLOSE: Rs 108.25

TARGET: Rs 120

BEL closed the week in positive territory. It is outperforming in short term. Its weekly momentum indicators are in BUY. It managed to close above 20-day moving average (DMA). Risk reward is favorable to BUY at current levels. One can buy with a stop loss of Rs 100 for the target of Rs 120 levels in short term.

SADBHAV ENGG: BUY

CLOSE: Rs 261

TARGET: Rs 295

SADBHAV ENGG settled the week in positive territory. It is outperforming in short term. Its weekly momentum indicators are in BUY. Its closed above 20 DMA. Risk reward is favorable to BUY at current levels. One can buy with a stop loss of Rs 229 for the target of Rs 295 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.