As we step into the monthly expiry week, our eyes would be on a few crucial levels. On the upside, 11,250 is the level to watch out for, whereas, 11,050 has now become key support.
Sameet Chavan
With global markets showing some favorable cues, last Monday, we had a cheerful start for the week at 11,000, marking the highest level since March 6, 2020.
This momentum extended to the following day as we witnessed yet another gap-up opening to extend this lead.
However, after this, the market had some reality checks in between which kept the market in a slender range, concluding the week a tad below 11,200 mark.
The banking index was one of the major charioteers of this extended move, barring Friday, when banking space witnessed some selling pressure, paring a decent portion of their weekly gains.
In continuation of our previous weekly commentary, our desired levels of 11,200 have now been met. But, since there are multiple technical observations that coincide around it, markets will have a daunting task in front of them.
Since we are extremely overbought, we are in two minds whether to go with the theoretical characteristic of this term ‘overbought’ or the practical one.
Theoretically, the current placement (78 percent retracement of the post COVID fall which coincides with 100 percent price extension of recent swings from March bottom) of the market is ideal to see some genuine correction, but practically, the market has the tendency to surprise us all the time.
Hence, rather than anticipating things from here on, we would rather let the market give us a further indication.
As we step into the monthly expiry week, our eyes would be on a few crucial levels. On the upside, 11,250 is the level to watch out for, whereas, 11,050 has now become key support.
One should remain hopeful as long as we are trading above this swing low at 11,050 and expect the market to give breakout in an upward direction to extend the move towards 11,350 – 11,400.
However, a breach of the lower end should be treated as a short-term pause to see some decent profit-booking.
We continue to advise traders to remain light and keep booking profits wherever it is necessary.
Also, if our markets have to see an upward move, the banking space plays a vital role in this. Hence, one needs to see whether Bank Nifty manages to go convincingly beyond 23,000-23,200 or not in the forthcoming week.
Here are two buy calls for the next 2-3 weeks:
Natco Pharma | Buy | LTP: Rs 730 | Target price: 800 | Stop loss: Rs 668 | Upside: 10%
The entire pharma space has been in limelight since the coronavirus pandemic outbreak.
One after another, almost every stock in this space or related, has seen a spectacular rally.
Natco Pharma has finally joined hands with its other peers and has been witnessing good buying interest for the last month.
In this process, we witnessed a series of higher highs higher lows and multiple breakouts.
Last Thursday, the stock prices broke out from a bullish flag pattern. The notable observation is the volume at which this breakout happened.
We could see more than thrice of average daily volumes to confirm a colossal intraday rally.
This is one of the laggards since May 2018 which has shown some spectacular moves over the last couple of months.
This month to date, the stock has added whopping 44 percent gains to the bulls’ kitty. Now, after taking a brief pause, we can see a breakout on the daily chart.
This price action collectively can be known as a bullish flag breakout. Looking at the higher degree timeframe charts, we expect the next leg of the rally to unfold in the coming days.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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