 "Short term out look for the market remains negative, says Sharekhan's Devang Shah")
NIFTY
CLOSE- 7422.45 (22.01.2016)
Sharp recovery from medium support. Few evidences are giving signs of short term reversal. Bulls are back. Third weekly negative close; Near short term reversal levels.
Market closed 3rd consecutive week in negative territory. It has achieved my short term targets near recent lows as expected last week. It made a low of 7241.50 levels on nifty during week. It sharply bounced back from these levels & closed daily in positive territory at the end of weekly trading session, confirming end of 5 wave decline or ending diagonal pattern on main index in wave-C of Z. It has also broken out of channel on upside on daily chart of nifty. These all the evidences are giving advance sign of short term reversal & medium term bottom formation around these lower levels. One should wait level wise confirmation to finally conclude short term trend reversal.
Short term out look for the market remains negative till nifty trades below 7470 levels, sustain above it will confirm further sharp pullback rally till 7600 levels in short term & further above 7970 levels in medium term.
All the other indices such as Midcap, small cap etc closed weekly in negative territory except bank nifty which in the only indices managed to close weekly in positive territory & confirming short term trend reversal. One can expect sharp rally till 17500 levels i.e. upper end of channel in short to medium term on bank nifty till 14730 levels holds for short to medium term perspectives.
Market will remain volatile ahead of expiry next week. 7300 & 7500 levels are crucial support & resistance levels based on derivative open interest data for expiry perspectives at current levels of market. It may remain in this range ahead of expiry next week.
Momentum indicators daily KST & daily MACD both are still in sell suggesting weakness in short term trend. Break of crucial support of 7240 levels will lead to further sharp fall till 7140-7080 levels in short term. One should be stock specific & watch out market behaviour at these crucial near short term reversal levels.
Stock Picks:
TATA MOTORS-BUY
Close- Rs 339.90
TARGET- Rs 358/370
TATA MOTORS closed weekly in positive territory. It has retraced 61.8% in this recent correction. Risk reward is favourable to BUY at current levels. One can BUY with Stop Loss of Rs 327.65 for the target of Rs 358/370 in short term.
PETRONET LNG -BUY
Close- Rs 251
TARGET- Rs 262/272
PETRONET LNG closed weekly in negative territory. It’s out performing in short term. It closed above 40 DMA. Risk reward is favourable to BUY at current levels. One can BUY with Stop Loss of Rs 240 for the target of Rs 262/272 in short term.
TATA STEEL-BUY
Close- Rs 246
TARGET- Rs 256/263
TATA STEEL closed weekly in positive territory. It closed above 20 DMA. It’s out performing in short term. Risk reward is favourable to BUY at current levels. One can BUY with Stop Loss of Rs 231 for the target of Rs 256/263 in short term.
Close- Rs 484
TARGET- Rs 502/510
LIC HSG closed weekly in positive territory. It closed above 20 DMA. It’s out performing in short term. Risk reward is favourable to BUY at current levels. One can BUY with Stop Loss of Rs 462 for the target of Rs 502/510 in short term.
The author is Portfolio Manager- PRO TECH-PMS at Sharekhan
Disclaimer: The analyst may have a position in the scrip mentioned above; the views given above are the personal views of the analyst
