Nifty close to 10,000, but eyes on geopolitical concerns

Last week, we had some encouraging moves in the market and in the process, the Nifty took a leap beyond the 9,800-mark. However, US President Donald Trump's threat to China on hiking tariffs over the weekend, spooked market participants across the globe. As a result, we had a huge gap-down opening on Monday, which was mostly followed by a consolidation throughout the remaining part of the week. Eventually, the Nifty ended the week tad above 9,200, shedding over 6 per cent as compared to the previous weekly close.

Although, it appears to be a sharp cut when compared to previous week's close, the overall trading action during the week was muted. In fact, the last couple of trading sessions' price action was extremely lethargic and the market completely looked directionless. Neither Bulls had the strength to overcome the sturdy wall of 9,400-9,450 nor Bears were dominant enough to violate the 9,100-mark. Hence, for the coming week, 9,450 to 9,100 remains to an immediate range. Only a sustainable breakout on either side would confirm the next path of action. Traders holding existing longs should maintain their positions as long as 9,100 is successfully defended.

At present, traders are advised to stay light and should ideally continue focusing on individual stocks. Although we are completely not out of the woods when it comes to coronavirus pandemic, we remain hopeful till the time key support mentioned is not violated. Once we see Nifty surpassing the higher boundary of 9,450, we would see a good broad-based participation in the market

Stock recommendations:

1. NSE Scrip Code – SUNPHARMA

View – Bullish

Last Close – Rs. 469

Justification – Pharma stocks are in a buzz in this pandemic and are now showing signs of outperformance after a slumber phase of more than four years. This stock, as well, has shown strong outperformance and recently, it has rallied from the levels of 388 to 500. On the daily chart, after some correction, prices seem to have resumed the uptrend by forming a bullish candle stick. Volume analysis indicates increase in volume during up move as compared to volume during correction which suggests accumulation in the stock.

Prices are well above key averages and oscillators are positively placed, supporting the buy call. Looking at all the above evidence, we sense an outperformance by this counter. Thus, we recommend going long for a positional target of Rs.510 in coming days. The stop loss can be placed at Rs.447.

2. NSE Scrip Code – HDFCLIFE

View – Bullish

Last Close – Rs. 520.05

Justification – The stock prices have confirmed a bullish continuation ‘Pennant’ breakout on the daily chart. The said breakout is supported with a good increase in volume and bullish candle stick pattern. On the daily chart, prices have closed above 89EMA which was previously acting as resistance and now indicates a change in polarity. In addition, momentum oscillator i.e. RSI, after forming a base around 50 level, has started northward journey, supporting the bullish view on this counter. Going with all the above scenarios, one can look to buy for a target of Rs.585 in coming weeks. The stop loss can be placed at Rs.487.