There are multiple resistances in the range of 10,200-10,350 that are the recent highs and medium-term averages so the upside looks little capped on the higher side.
Vikas Jain
Nifty closed at 10,000 levels, up 32 percent from its March lows, and 12 percent from its recent May expiry lows.
The most underperforming sector PSU Banks too witnessed positive momentum during the ongoing week to gain 15 percent from last Thursday.
High beta sectors like Realty and Media gained 14 percent and 10 percent while mid-caps and small-caps also outperformed the broader markets.
Global markets have also witnessed a sharp recovery to bounce in the range of 35-40 percent since the beginning of the lockdown.
Major indices will face resistance as 38.2 percent is an important Fibonacci retracement number. The full-year results for FY20 is in the last leg of announcements so we do not expect any major newsflow in the coming weeks.
We believe there are multiple resistances in the range of 10,200-10,350 that are the recent highs and medium-term averages so the upside looks little capped on the higher side.
One should wait for some lower pullbacks to 9,600 levels to fill the gap area and witness a time correction over the next few weeks.
One has to be very selective and look for declines to invest from current levels in individual sectors and stocks.
Here are three trading ideas for the next 3-4 weeks.
Cochin Shipyard | Buy | LTP: Rs 239.40 | Target price: Rs 285 | Stop loss: Rs 215 | Upside: 19%
The stock has witnessed a sharp breakout on weekly charts after a double bottom near sub Rs 220 levels.
The crossover of its short and medium-term averages on daily charts with strong volumes reinforces our positive stance.
RSI has also turned positive on weekly charts, indicating limited weakness in the stock.
The stock has witnessed a sharp up move from the lower levels and now resisting crossing its 100-day average on daily charts.
Trend reversal and RSI turning downwards from the top could witness a sharp correction to test the lower range.
As per the current setup, we believe the stock will remain under pressure for the next couple of weeks.
Voltas | Sell | LTP: Rs 568.25 | Target price: Rs 510 | Stop loss: Rs 605 | Downside: 10%
The stock had a strong move from its double bottom support levels over the last 13 days and it has completed its up move to witness some pullback for lower levels.
RSI is trading near the higher band of average 70 levels and multiple resistance on the higher side in the range of Rs 598-610 levels would cap the up move.
(The author is Senior Research Analyst at Reliance Securities)
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