 "Trading strategy")
NIFTY
CLOSE- 8323.20 (08.07.16)
Market closed weekly marginally in negative territory. It consolidated in thin range for the entire week. It traded in narrow range for whole week. It made a high of 8398 levels. It still trades in channel as per daily chart. One should expect it to trade towards upper end of channel towards short term targets levels till it reverses.
We are observing PAUSE or CONSOLIDATION in the market after sharp move in recent rally. Sometimes it tests the patience of traders in short term. But one thing I observed that where nothing works at that time simple DOW THEORY gives good results. And it will help esp. to medium term investors.
Short term outlook for the market remains Positive till nifty trades above 8100 levels & expecting targets in the range of 8500-8550 levels in near term. Medium term out look for the market still remains positive till nifty trades above 7927 levels & expecting targets in the range of 8640-8800-9100 levels in medium term.
In earlier instances of 2014-15 MODI RALLY case, market continued its UP trend & entire trend could have been TRAILED well with the help of simple DOW THEORY of HIGHER TOP-LOWER BOTTOM as per nifty daily chart. It looks like very similar pattern & behaviour on charts in current scenario as well. Wave counts are still not confirming accurately about current trend. Therefore, I believe that simple DOW THEORY is a good alternate to TRAIL this entire trend further for higher levels targets in short to medium term perspectives. In that case, Investor should Trail this trend till medium term reverses.
8200 & 8500 looks strong support & resistance levels based on derivative option open interest data at current levels of market. As mentioned earlier, reiterating same thing once again that its stock pickers market & those who are holding from medium term perspectives are getting benefit of trend.
Momentum indicators Daily KST & Daily MACD both are in BUY supporting UP trend. One should use any kind of decline or consolidation to BUY till short term reverses. One should be stock specific & follow the trend till it reverses.
Stock Picks:
ASIAN PAINTS: BUY
Target: Rs 1037 - Rs 1050
Stop Loss: Rs 964
Asian Paints is outperforming in short term. It closed weekly in positive territory. Its momentum indicators are in BUY. It closed above 40 DMA. Risk reward is favourable to BUY at current levels. One can BUY with stop loss of Rs 964 for the target of Rs 1037 - Rs1050 levels in short term.
DLF: BUY
Target: Rs 160
Stop Loss: Rs 149
DLF is outperforming in short term. It closed weekly in positive territory. Its momentum indicators are in BUY. It has still wave-V up pending on daily chart. Risk reward is favourable to BUY at current levels. One can BUY with stop loss at Rs Rs 149 for the target of Rs 160 in short term.
LIC HOUSING: BUY
Target: Rs 526-Rs540
Stop Loss: Rs 494
LIC Housing is outperforming in short term. It closed weekly in positive territory. Its momentum indicators are in BUY. It’s extending towards its all time higher levels. Risk reward is favourable to BUY at current levels. One can BUY with stop loss Rs 494 for the target of Rs 526-Rs 540 in short term.
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst.
The author is Portfolio Manager- PRO TECH-PMS at Sharekhan
