Wait for further uptrend

Mumbai: On the last day of the week, the benchmark indices witnessed a stellar rally as BSE Sensex was up over 210 points. Among sectors, Energy, Oil and Gas, indices rallied over three per cent whereas despite strong momentum Reality and Media indices traded in the negative territory. Reality down 2.60, Media index down by 2.10 per cent.

During the week, the market successfully cleared the short-term resistance of 78,000 and post breakout the bullish momentum intensified but on last Friday, it witnessed some profit booking at higher levels.Technically, a long bullish candle on weekly charts and breakout continuation formation on daily charts indicating further uptrend from the current levels.

“We are of the view that, the short-term market texture is bullish, but due to temporary overbought conditions, we could see some profit booking on higher levels,” says Amol Athawale, Vice-President, Technical Research Kotak Securities.

For the trend, following traders now, 79,000 and 78,700 would act as a key support zones. Above the same, the bullish sentiment is likely to continue. On the higher side the market could rally up to 79,500-79,800. On the flip side, below 78,700 the sentiment could change. Below the same, we could expect one technical correction till 78,400-78,000. For Bank Nifty, the short term set up is still in the positive side. For positional traders now, 52,000 and 51,800 or 10 day SMA (Simple Moving Average) would be the important support zones while 53,000-53,300 could act as crucial resistance areas for the short-term traders. However, below 51,800pts, the uptrend would be vulnerable.

“Profit taking in banking stocks led the downfall in key benchmark indices, which had hit fresh intra-day highs in early optimism. While markets displayed volatility and ended weak in late selling, both Sensex & Nifty managed to close above their psychological levels of 79k and 24k respectively,” says Prashanth Tapse, senior V-P (research), Mehta Equities.

Renewed FII buying in the current month so far and Indian government bonds inclusion in JP Morgan EM bond index had triggered a major rally this week, but markets could turn volatile once again as higher valuations and no change in interest rate stance could prompt investors to book profit at regular intervals

STOCK PICKS

Atul Ltd | Buy | CMP: 6479.50 | SL: 6,390 | TARGET: 6,625

The stock has given a good breakout above its anchor VWAP resistance mark of 6,445 and managed to close above the same. With the price re-testing its AVWAP support mark of 6,410, the stock is offering an attractive risk-to-reward opportunity at current levels. A stop loss should be set at the 6,390 mark for potential upside targets of 6,625 and above on Atul Ltd.

Indus Tower | Buy | CMP: 375.30 | SL: 363 | TARGET: 400

The stock has given a good breakout above its recent swing high resistance mark of 369.90 and successfully managed to close above the same. With the price holding up well and volumes surging to nearly 2 times its average (30) days traded volume, the stock looks like a good buy with a strict stop loss placed at the 363 mark for potential upside targets of 400 and above.

(Source: Riyank Arora, technical analyst at Mehta Equities)

CMP (Current Market Price); SL (Stop Loss)/ All prices in Rs