An evening walk down Dalal Street: 'Nifty could touch 10,900 soon, long traders should keep 10,580 as SL'

Bulls remained in control of D-Street for the second consecutive day in a row on February 21 after falling for eight consecutive days in a row and formed a bull candle on the daily charts.

The index is comfortable trading above its 100-day moving average as well as 5 and 13-days exponential moving average (EMA) on the daily charts that is a positive sign, but for bulls to regain control, the index has to hold above 10,900, suggest experts.

If somebody plans to go long on the index then trading with strict stop losses is a better bet for capital preservation. A trailing stop loss below 10,640-10,585 should be kept for all long positions.

The market extended gains for the second day in a row owing government’s announcement on the recapitalisation of PSU banks and an indication that the US Fed will be patient in raising rates in 2019.

“It is early to say that the pain is over yet because the index is still trading in a broader range of 10,600-10,950-11,000. Uncertainty around election outcome is still not over which would cap any further upside,” Shrikant Chouhan, VP - Technical Research at Kotak Securities told Moneycontrol.

“I am expecting the market to remain in a range, but as Nifty took support at 10,580, it formed a bullish reversal formation on a daily basis that could lift the index towards 10,900 in next few days. And, investors who are long should keep 10,580 as a stop loss,” he said.

In terms of specific stocks or sectors, Chouhan said that we expect some reversal formation in auto stocks that have been under pressure, which might have already started happening. “We like Maruti Suzuki and see it moving towards Rs 7,000-7,050 in next few days,” he added.

Stocks in news:

The Nifty PSU bank rose 0.5 percent led by gains in Allahabad Bank, Central Bank of India, PNB, Bank of India, Union Bank of India, Syndicate Bank, Vijaya Bank as well as SBI after the government announced final recapitalisation tranche amount of Rs 48,239 crore for as many as 12 public sector banks.

Reliance Capital gained 11 percent after the company invited Nippon Life to acquire its stake in Reliance Nippon Life.

Tech Mahindra ended 1 percent higher after the board approved the proposal for buyback of its own fully paid equity shares at Rs 950 per equity share for an aggregate amount not exceeding Rs 1,956 crore, a premium of around 15 percent to its market price.

Dynamatic Technologies rose nearly 5 percent as company signed a memorandum of understanding (MoU) with the joint-stock company (JSC) Russian Helicopters on Ka-226T Helicopter.

Global Updates:

European markets are trading mixed being cautiously optimistic that the world's two largest economies could soon secure a trade deal to end a protracted dispute.

Asian markets ended mixed as traders digest a release from the Federal Reserve. Nikkei 225 gained 0.15 percent to close at 21,464.23, while the Topix ended flat at 1,613.50.

Kospi closed flat at 2,228.66, Hang Seng rose around 0.3 percent to close at 28,629.92.