Experts say stay cautious as market hits fresh highs, name 10 trading ideas for 3-4 weeks

Experts are of the view that the trend is still on the upside but investors should remain cautious. The crucial support for the index is placed at 13200 while the big resistance could be around 13600.

Kshitij Anand

Dec 14, 2020 / 11:54 AM IST

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The past week was a historic one for Indian markets as both Sensex and Nifty50 closed above crucial psychological levels. The S&P BSE Sensex climbed Mount 46K while Nifty50 closed above 13,500 levels.

The S&P BSE Sensex rallied 2.2 percent while the Nifty50 was up 1.9 percent for the week ended December 11 compared to 0.7 percent rise seen in the S&P BSE Midcap index, and about 1.3 percent growth recorded in the S&P BSE Smallcap index in the same period.

Sectorally, financials and consumption outshone while auto and metal took a breather during the week.

Experts are of the view that the trend is still on the upside but investors should remain cautious as we trade near the unchartered territory. The crucial support for the index is placed at 13,200 while the big resistance could be around 13,600.

“The Nifty witnessed follow-through strength to last week’s brief consolidation (13200-12800) and approached our earmarked target of 13600, on expected lines. As a result, the weekly price action formed a sizable bull candle carrying higher high-low over the sixth week in a row, indicating the continuance of positive bias,” Dharmesh Shah, Head – Technical, ICICI direct told Moneycontrol.

“Going ahead, we believe 13600 would be the key level to watch, as only a decisive close above 13600 would lead to an extension of the ongoing rally towards 13900 mark as it is the 161.8% extension of the consolidation range (13200-12800), projected from breakout area of 13200, placed at 13847,” he said.

Shah further added that a failure to sustain above 13600 would lead to consolidation in the 13600-13200 range amid stock specific action.

We have collated a list of 10 trading ideas by experts for the next 3-4 weeks:

Expert: Shabbir Kayyumi, Head of Technical Research at Narnolia Financial Advisors Ltd.

Abbott India Ltd: Buy Around: Rs 16000 | LTP: Rs 16,085| Target: Rs 18400| Stop Loss: Rs 15000 | Upside 14%

The stock appears to have registered a falling channel breakout with a close above its critical hurdle of 16000 in Friday’s session on massive volumes.

Considering the bigger price damage this counter has suffered in the past, much higher targets can’t be ruled out.

Indicators and oscillators are looking conducive for price patterns. Hence, for the time being, positional traders should buy around 16000 and can look for an initial target of 18400 by placing a stop loss at 15000.

The Federal Bank Limited: Buy around: Rs 64| LTP: Rs 66.25| Target: Rs 73| Stop Loss: Rs 58 | Upside 10%

The stock has maintained a strong base near 58-60 zone and current sustainability above all significant averages has improved the bias with a positive candle formation on the daily chart.

The RSI also has indicated a trend reversal signal to buy. With the chart looking attractive, we suggest buying this stock around 64 for a target of 73, while keeping the stop loss of 58.

ITC Limited: Buy around: Rs 210| LTP: Rs 216| Target: Rs 235| Stop Loss: Rs 195 | Upside 8%

This counter appears to have registered a clear breakout with a close above its multi-week consolidation zone on the weekly line chart. A strong bull candle with decent volume is showing more upside moves in the coming sessions.

If the stock closes above 220 levels, it should eventually head higher towards its initial range breakout target of 230 & 240.

For the time being, positional traders are advised to buy on a pull back around 210 into this counter for a target of 230 & 240, with a stop below 195 on a closing basis.

Expert: Sameet Chavan, Chief Technical & Derivatives Analyst at Angel Broking)

Most of the paint stocks did phenomenally well over the past many years. But in the recent rally too, Shalimar Paints remained laggard and did not follow its larger peers.

With the kind of price action we witnessed last Friday, it’s time for this stock to show its mettle now.

We witnessed a gigantic bullish candle along with sizable volumes, confirming a huge breakout on the daily chart.

This led to stock prices traversing weekly ’89-EMA’ with some authority after a long time.

The entire cement space has been enjoying a strong bull run since the March lows. However, for the last couple of weeks, these stocks have been a bit under the weather.

We can see the beginning of a profit-booking phase in ACC after reaching its previous record highs and in the process, it has finally broken down below its recent multiple support area around Rs 1,650.

The trend-following indicator ‘Super Trend’ has also confirmed bearishness as the stock prices sneaked below it on a closing basis after two months.

In the auto universe, this stock has clearly been the dark horse this year.

Despite the March fiasco, this stock has managed to clock whopping gains of about 116 percent YTD, which is a remarkable achievement in tough times.

But now with a near-term view, the stock looks a bit overstretched and some sort of profit-booking is overdue.

In fact, if any meaningful decline comes, it should be considered a healthy sign with a broader perspective.

If we take a glance at the daily chart, the stock prices slipped convincingly below the ’20-day EMA’ for the first time in the last few weeks.

This also confirms a small ‘Double Top’ kind of pattern. Hence, some sort of profit-booking in the coming days cannot be ruled out.

Expert: Gaurav Garg, Head Research, CapitalVia Global Research Limited

Mahanagar Gas Ltd: Buy| LTP: Rs 1059.20| Target: Rs 1130| Stop Loss: Rs 1020| Upside 6.7%

The stock has formed a bullish Flag pattern in the daily charts, and it also broke above its immediate resistance placed at 1062.50 might lead to upside momentum.

The recent volume additions in the stock might help it to gain momentum. The stock is trading above its important moving averages.

Cyient: Buy| LTP: Rs 496| Target: Rs 545| Stop Loss: Rs 470| Upside 10%

The stock was trading in a closed range for the last few weeks, stock closed above its key resistance placed at 490. Further breaking its psychological level of 500 might push the stock into its next trading range.

Avanti Feeds: Buy| LTP: 544| Target: Rs 588| Stop Loss: Rs 520| Upside 8%

The stock has bounced from its important moving average. The stock is trading in its resistance zone, and a break above this resistance might take the stock into the higher territory. The stock is showing signs of strength in RSI which is a positive sign.

Brokerage: SMC Global Securities Ltd

Bharat Forge: Buy| LTP: Rs 553| Target: Rs 620| Stop Loss: Rs 505| Upside 12%

The stock closed at Rs 552.20 on 11th December 2020. It made a 52-week low at Rs 207.50 on 07th April 2020 and a 52-week high of Rs. 565.50 on 04th December 2020.

The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 443.40. The short-term, medium-term, and long-term bias are looking positive for the stock as it is trading in higher highs and higher lows on weekly charts.

Apart from this, it is forming an “Inverted Head and Shoulder” pattern on weekly charts, which is bullish in nature. Last week, stock consolidated in a narrow range and has managed to close on verge of breakout of pattern along with high volumes so buying momentum may continue for coming days.

Therefore, one can buy in the range of 540-545 levels for the upside target of 620-640 levels with a stop loss below 505. The time horizon could be 1-2 months.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.