The latter half of the week brought back smile among traders and investors after undergoing some challenging period.
The first couple of days extended previous week’s losses; however, the remaining part turned out to be a saviour for our market, courtesy strong cues from the global bourses.
Although the overall action in the index was not that big, the broader end of the spectrum did extremely well and hence, we not only defended key support but also managed to reclaim 10,800 on the Nifty.
February 19 session was quite crucial for the market. Despite taking a nosedive in the penultimate hour, our markets somehow managed to defend the recent swing low of 10,583.65 (low on January 29).
The daily chart depicted an ‘Inverted Hammer’, which eventually got converted into a ‘Morning Star’ pattern due to a price development on the following day.
Since there was an occurrence of a ‘positive divergence’ on the hourly chart (on February 19), markets had all the reason to bounce back.This is what we saw in the remaining part of the week.
Now going ahead, as long as 10,580 is not broken, traders should look to trade on the positive side. Before this, 10,720–10,646 would be seen as immediate support.
On the flipside, 200-day SMA level of 10,860 would be a level to watch out for. A move beyond this would trigger a decent up move towards 10,920–11,000.
This week’s bounceback was initially propelled by the banking index and later on by IT and auto. But the only outshining sector throughout was the metal space. As we had anticipated, all constituents within this high beta pocket soared to a great extent.
Also, midcaps have shown some signs of revival, hence do watch out for this as well. All in all, set up looks good for the extended relief rally. But, considering recent moves, it’s better to take one step at a time.
Here are two stocks that could give 13-15 percent return in short term:
Oberoi Realty: Buy| LTP: Rs 503.10| Target: Rs 570| Stop loss: Rs 464| Upside: 13 percent
The entire reality space has been buzzing since the last couple of weeks on the hope of GST rate reduction for under construction houses. The same is getting reflected in prices too and this stock seems to be a preferred bet within this basket.
Boost to real estate sector: GST Council slashes tax rate on under-construction residential properties
Last week, we witnessed a breakout from recent hurdles. The volume activity in the last few days has risen substantially; providing credence to the up move. We recommend going long for a positional target of Rs 570 in coming weeks. The stop loss can be placed at Rs 464.
Sun TV: Buy| LTP: Rs 585.90| Target: Rs 672| Stop loss: Rs 559| Upside: 15 percent
This stock has undergone a massive price correction in the last thirteen months. This corrective mode finally seems to have arrested around its 78.6 percent retracement of the previous multi-year rally.
This level coincided with other multiple technical pieces of evidence and hence, can be considered as a rock-solid support zone. In the week gone by, the price started rebounding sharply and in the process has managed to give the first sign of revival on charts.
Considering this development, we expect the stock to do well in the near term. Although our near-term target for the existing positions is Rs 615, we expect the stock to give an extended move. Thus, one can look to go long for a target of Rs 672 in coming weeks. The stop loss can be placed at Rs 559.
The author is Chief Analyst- Technical & Derivatives, Angel Broking.
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