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In the last week, trading started on a flat note on Tuesday but Nifty gradually resumed its upward trajectory to reclaim 13,000-mark first and then clocked fresh record highs as the week progressed.
There was no major movement but overall bias remained positive as we managed to add another couple of percent to the previous weekly close.
There has been no stopping for the recent rally and it’s been more than one-and-a-half months now for the markets giving gravity-defying moves.
For the week gone by, if we look at the benchmark, we may not get the real picture of the overall action, but if we take a glance at some of the individual themes like auto, we see individual stocks have given spectacular moves throughout the week.
We have been hovering in the overbought territory for the last 2-3 weeks, but sometimes the market does not respect the theory and hence, it can remain overbought for a long time as well.
But in our sense, the optimism has now turned into a bit of euphoria and when such a condition happens, it’s advisable to be a bit proactive and take some money off the table, especially for a momentum trader.
Undoubtedly, the broader degree trend remains strongly bullish and in case of any meaningful decline, one should stick to the ‘buy on decline’ strategy.
As far as levels are concerned, 13,300 – 13,500 would be seen as an immediate resistance zone, whereas on the lower side, 13,150 – 13,100 are the levels to watch out for.
If we observe the intraday charts, we can see the formation of the ‘Rising Wedge’ pattern on the hourly chart and hence, a move below 13,100 would lead to further profit booking towards 12,980 – 12,900.
Traders are advised to take note of all these key levels and act accordingly.
Here is one buy and one sell calls for the next 2-3 weeks:
Force Motors | Buy | LTP: Rs 1,262.85 | Target price: Rs 1,420 | Stop loss: Rs 1,197 | Upside: 12%
Auto was one of the few sectors which initiated a u-turn post-March fiasco. We witnessed a V-shaped recovery in the first five months (from April to August) followed by a brief pause of nearly two months.
In fact, in the week gone by, some of the stocks from this space just took off and Force Motors was one of them.
Due to the recent rally, the stock prices are back to pre-COVID levels and on the daily chart, we can see the breakout of the ‘Bullish Flag’ pattern.
Volumes have been exceptional in the last couple of days’ surge and hence, we expect the stock to continue this northward journey in the near term as well.
HDFC Bank | Sell | LTP: Rs 1,390.10 | Target price: Rs 1,320 | Stop loss: Rs 1,436 | Downside: 5%
This marquee banking name is not associated with the tag of 'bearish’ along with it.
The longer-term view remains bullish but on a smaller timeframe chart, we are seeing some signs of exhaustion, which may also be interpreted as a profit-booking after a gigantic rally.
During the latter half of the week, the stock prices started sulking a bit after some unfavorable news flow.
This is getting reflected in the stock price as we can witness a slightly bigger bearish candle on the weekly chart.
In fact, on the daily timeframe, it's challenging the key 20-day EMA placed at Rs 1,380 – 1,370.
The moment we see this stock sliding below Rs 1,370, we may see extended profit-booking in this stock.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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