Short term outlook for markets remain negative, says Devang Shah

One should be stock specific & follow the trend with stop loss levels till it reverses

NIFTY

CMP- Rs 7210.75 (19.01.16)

Market closed weekly in positive territory. It consolidated in range for last entire week with high volatility. It so far failed to extend on down side for wave-V on daily chart as expecting.  All the other indices such as Bankex, midcap, small cap etc also closed weekly in positive territory. Few of the evidences are started to show clue for short term reversal at the end of weekly trading session. It showing sign of end of correction at recent lows of 6869 levels on nifty but I would like to wait for one or two more trading session to get level wise (Price wise) confirmation to finally conclude short term trend reversal.

 

Short term out look for the market remains negative till nifty trades below Rs 7250 levels & expecting targets in the range of 6850-6800 levels in short term. Broader market ( Midcap, small cap Indices) & Bank nifty created negative divergence in short term at the end of weekly trading session., its not a good sign for short term, if market has completed correction.  These indices has to also participate in rally if its end of correction. One should also watch out these indices behaviour apart from main index (nifty/Sensex) behaviour to finally conclude short term trend reversal. Medium term out look for the market still remains negative till nifty trades below Rs 7600 levels. Rs 7000/7300 levels on nifty are crucial support & Resistance levels respectively for short term based on derivative option open interest data for this expiry. Market will remain volatile ahead of expiry next week & also followed by Union budget at the end of this month. Momentum indicators daily KST & daily MACD came in to BUY may create volatility in short term. Close above short term reversal levels will lead to sharp rally till 7420-7500 levels in short term one should be stock specific & follow the trend with stop loss levels till it reverses.

Stock Picks:

M&M: BUY

CMP: Rs 1230.75

TARGET: Rs 1270/1280

Stop Loss: Rs 1203
 

M&M closed weekly in positive territory. It’s out performing in short term. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. 

BHARTI AIRTEL: BUY
CMP: Rs 326.30

TARGET: Rs 344
STOP LOSS: Rs 344

BHARTI AIRTEL closed weekly in positive territory. It’s out performing in short term. Its momentum indicators are in BUY. Risk reward is favourable to BUY at current levels. 

DHFL:  SELL

CMP: Rs 152

TARGET: Rs 147/141
STOP LOSS: Rs 159

DHFL closed weekly in negative territory. It has still wave-V down pending on daily chart. It closed below 20 DMA. Risk reward is favourable to SELL at current levels. 

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