Nifty outlook & stock picks by Sameet Chavan: Buy Federal-Mogul, Grasim

Nifty Outlook

We had a flat start to the week on Monday and, in fact, in the initial trade, there was some mild negativity seen in the market. But, similar to the recent trend, the market absorbed the pressure and then resumed its upward momentum, once again, led by the giant RELIANCE. As the day progressed, the buying momentum continued to first reach the new milestone of 15,500 and in the final hour, 15,600 became the reality as well. Eventually, the Nifty ended the session with nearly a per cent gains. After a brief pause on the subsequent day, the Nifty continued its northward march to hit fresh record highs beyond 15,700 during the latter half of the week to conclude with one and half a per cent gains.

The kind of price action we have been witnessing since few days, the commentary would sound a bit repetitive because there is nothing different to talk about. As we have been mentioning, every 100 points upside level should be treated as an immediate resistance and now this level comes at 15,800. Ideally, considering the Fibonacci ratios, we do not see any major hurdle before 16,000 and hence, even if this has to be met in the near term, the move would continue to be slow and steady in nature. One of the favourable factors is the significant drop in INDIA VIX which is back to the pre-COVID levels. On the flipside, 15,600 – 15,525 – 15,450 are to be seen as key support levels. Only a handful of index heavyweights are giving some notable moves, otherwise the real action still continues in the broader end of the spectrum. Stocks from the cash segment are literally roaring and thus it’s advisable to stick to this approach.

We reiterate when market moves in such typical manner, it’s better not to get complacent and one should take one step at a time. Also, it would be a prudent strategy to avoid aggressive leveraged bets (especially overnight) because any in between hiccup may spoil your short term trading journey.

Stock recommendations

NSE Scrip Code – FEDERAL-MOGUL GOETZE (INDIA) LTD.

View – Bullish

Last Close – Rs. 327.70

Justification – A lot of MIDCAP counters that did not participate in the rally last year have finally started to have some catch-up moves and this stock is clearly one of them.

In the last few weeks, we have witnessed a good base building in this stock and the volumes have been extraordinary in the up move from the recent low. Since the last three months, the stock prices have been struggling around 310 and, finally last week, the fifth attempt to go beyond this hurdle became successful. In this course of action, prices managed to surpass the sturdy wall of daily ‘200-SMA’ convincingly, which is an encouraging sign. Looking at such dream set-up, we expect the stock to be a dark horse in the near term. We recommend going long for a short term target of Rs. 365. The stop loss can be placed at Rs. 307.

NSE Scrip Code – GRASIM

View – Bullish

Last Close – Rs. 1,503.25

Justification – We have seen a stupendous move in this stock since March 2020 lows. It has already given nearly three-fold returns in merely 14 months, that too, without giving any meaningful correction in between. In the last couple of months, the stock prices went through a good time correction and a minor price-correction; but now we can see prices resuming its upward trend as it unfold a next leg of the rally. Friday’s upward move led the stock prices to its new record highs along with higher than average daily volume. In addition, the ‘RSI-smoothened’ oscillator has crossed the 70 mark, which may provide impetus to the move.

Considering these evidences, we recommend this stock for a short term price target of Rs.1,580. The stop loss needs to be maintained at Rs.1,450.