Sensex, Nifty gearing up to breach all-time highs; Charts signal support for these stocks

Focus should be on Auto, Pharmaceuticals and Financials stocks with a short term view. (Image: Reuters)

By Shrikant Chouhan

Globally the equity markets are stabilizing as Federal Reserve officials tried to soothe concerns about inflation. The 10-year bond yield in the US is cooling off from the highs of 1.69 and currently, it is at 1.59.  It has triggered weakness in the dollar index, which is comfortably quoting below the psychological support at 90.  It is positive for the emerging markets as it increases inflows and the same is getting reflected in the performance of the Asian markets. 

On Tuesday, again the gap-up opening failed to boost the market sentiments and finally closed with nominal gains despite strong indications globally. This means that the expiry pressure is higher in the market. Technology and FMCG stocks are the strengths of the market on Tuesday, otherwise, the market would have closed in negative territory.

The Nifty/Sensex has made a higher bottom at 15163/50474 and rebounded sharply to close above the previous day’s closing. It looks like that the market is preparing to cross the all-time highest level, which is at 15431/51500. The basic trend of the market is bullish and our strategy should be to buy on dips or at major supports.  Buying is advisable between 15200/15100 levels with a final stop loss at 15050 levels.  On the higher side, 15330/51150 and 15430/51500 would be major obstacles.  The Bank-Nifty is comfortably holding above the crucial level of 34200 that would push the index towards 36500 in next few weeks.

Our focus should be on Auto, Pharmaceuticals and Financials stocks with a short term view.

Stocks to buy

LTI: BUY, CMP 3707.5
TARGET 3890, SL 3630

Post double top formation around 4450, the stock witnessed strong selling pressure and it corrected without any meaningful support, however on the weekly scale a Spinning Bottom candlestick pattern is evident signalling for the bullish reversal activity in the near future.

LUPIN: BUY, CMP 1211.05
TARGET 1270, SL 1180

After the strong breakout move from the levels of 1100 with a huge volume, the stock is trading in a range-bound movement well above its short term moving averages as a result the formation of a Flag chart pattern on the daily scale hints that the bullish momentum to resume in the coming sessions.

MCDOWELL: BUY, CMP 588.3
TARGET 620, SL 575

The Higher High and Higher Low chart formation is visible in the recent up move of the counter, additionally, the rise in volume activity in the last few days is indicating further bullish movement to continue with good strength in the coming horizon.

BRITANNIA: BUY, CMP 3439.5
TARGET 3610, SL 3370

Post phenomenal upward move from the lows of 2100 till 3900, broadly the stock has been trading in a wide range and the current surge in volume near its multiple support zone is indicating that a strong rebound is very likely as the stock is available near the lower end of the range with a favorable risk and reward scenario

(Shrikant Chouhan is the Executive Vice President, Equity Technical Research at Kotak Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)