As expected, we witnessed huge participation of bulls last week at lower levels and Nifty closed with weekly gain of 1 percent at 10,805.45. The recent fall was arrested at 61.8% retracement level of latest swing move. Generally the panic lows at important support levels stay for a long time and provide opportunity to buy quality stocks.
Last week, after initial rally, Nifty went sideways and we can expect it to continue trading in narrow range this week as well until 100-DMA (10,940) trades on a higher side decisively and if it does, we could see an extension of this rally towards 11,050 and 11,310.
On the other hand, 200-Day Moving Average (10,756) will act as an immediate support level, decisive break of which could result in
minor correction till 10,560 and 10,410 level.
On the option front, 10,000 put option strike price is still holding a highest cumulative open interest followed by 10,500 strike price which is suggesting any fall is likely to be bought into. On the call side, major cumulative open interest is placed at 11,100 strike price. Option band suggesting a trading range between 10,500 and 11,100 levels.
At this juncture, when all major events are behind us and RBI Governor Shaktikanta Das has taken the charge, it could be fresh sunrise for NBFC and Banking sector. Therefore, once 10,940 trades on higher side, we anticipate this rally is likely to continue for a while.
Vedanta | Rating: Buy Target: 242 | Stop Loss: 186 | Return 20 percent in medium term
Metal stocks are going through rough phase for the last few months and now getting ready for tradable move. We have picked Vedanta from the pack. Stock is trading at 50% retracement level of the last 2 years swing move. Monthly RSI is reversing from important support level.
Bullish engulfing candlestick pattern has emerged on weekly chart suggesting bulls are likely to take charge in coming days. Daily RSI is making a range shift to the buying zone and prices have closed above 20-day moving average. Bollinger bands are giving buying indication as stock has formed bullish W pattern. We expect the buying to emerge in the counter and can be bought for short to medium term gain.
PVR | Rating: Buy | Target: 1,950 | Stop Loss: Rs 1,320 | Return 25 percent in medium term
The stock has been in continuous uptrend since 2012 and propelled from Rs 150 to Rs 1655 level and now consolidating for the last 1.5 years after testing 38.2% retracement move. Looking at weekly chart and momentum indicator we can expect a break out in the stock in near term for fresh trending move.
Weekly RSI has started in bullish zone after several weeks and prices are tagging above upper Bollinger band. Stock has started trading with higher top and higher bottom formation in daily charts. We suggest pyramiding in the counter, buy at current levels and add more once close above Rs 1655 on weekly basis.
Federal Bank | Rating : Buy | Target: Rs 102 | Stop Loss: Rs 86 | Return 11 percent in short term
We have recommended the stock earlier also at the level of Rs 82 and now expecting the move to continue in short term. After forming bullish engulfing candlestick pattern in monthly chart, prices are moving upwards and momentum indicators are suggesting the move is likely to continue.
Prices have taken resistance at 20 DMA thrice in last few weeks and now finally trading above it suggesting extension of recent up move is likely. Falling trend line resistance has also been breached on higher side. On daily chart stock has started trading above 200 DMA and tagging above upper Bollinger band. Thus, can be bought for short term gain.
Aurobindo Pharma | Rating: Sell below Rs 705 | Target: 627 | Stop Loss: 751 | Return 11 percent in short term
Stock is in a phase of distribution for the last 3 months and now on the verge of breaking down of a rectangle formation. RSI on monthly chart is facing hurdle at important resistance level.
Bearish engulfing pattern has emerged in weekly chart with negative divergence. Stock is facing resistance of declining trend line. On daily chart stock has started trading below important moving averages. Pattern will get confirm once Rs 705 trades on lower side. Hence, the stock is conditional sell below the aforesaid level.
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