By Shrikant Chouhan
Technically, at present the market is following the pattern of the rally between 2001 to 2008. It could be 10 times in the next 7 to 8 years. The Nifty was at 7500 during Covid19 crisis and the Sensex was at 25700. Nifty has the potential to move up to 75,000 and Sensex to 2,57,000 points. In the next 3-6 months, we expect the Nifty to reach 15,500 and Sensex at 53,000 levels.
During the pandemic (2020), markets fell to extreme fear levels across the globe. Now the time has come for the markets to move to the extreme “Greedy levels”. The “sectoral rotational activity” has started which was missing between 2008 to 2020 FIIs are investing significantly since June 2020 which would aid the rise in rupee. Cement stocks did extremely well, which had never happened in the last 10 years, indicating that core economy data is either improving or going to improve.
Between 1992 to 2001, Sensex moved from 2000 (lowest) to 6000 (highest) levels, which posted decent returns, however, the rally was completely gradual and highly volatile. It was the toughest task for every participant (Fund Managers to Retail) to capture major moves.
However, between 2001 to 2008 it was flourishing for everyone. Every individual and corporate made huge money as the rally was consistent and less volatile. BSE Sensex moved from 2,000 to 20,000 (10 times). While Nifty 50 raced from 850 to 6350 (8 times) levels. Similarly, from 2008 to 2020, the Nifty 50 rose from 2250 to 12000 (6 times) levels and Sensex from 7700 to 42000 (6 times) levels. It was yet again gradual and highly volatile. It was the toughest task for every market participant to gauge the mood.
Based on the above correlation our stance, one should buy on every major dips. Support for the market exists at 14000 and 13000 levels.
AMBUJA CEMENTS (BUY): The stock is forming higher top higher bottom series on a weekly and monthly basis. It has recently broken consolidation triangle formation at 225 and recovered back sharply. Technically, the stock is ready to surpass the level of 291.50, which is the all-time highest level for the stock. Buy in tranches with a stop loss at 225. On the higher side, we could see the levels of 290 and 300.
JINDAL STEEL & POWER (BUY): The stock has formed and validated to the formation of a double bottom. Based on it we could see the levels of 350 on the minimum and 550 on the maximum side. The metal index 700 points away from the all-time highest levels, which it has formed in the year January 2018. We are of the view that the index is ready to surpass the all-time highest levels and that would generate more fuel in high beta stocks like JSPL. Buy at current levels and more on dips with a final stop loss at 270.
BHARTI AIRTEL (BUY): The stock is in long term break out. It has broken multiyear resistance at 500. Although the stock was down in the second half of the year it recovered back and regained the level of 500 plus. We are of the view that the stock is heading for 700 in the medium term. It is a buy at current and more on dips with a final stop loss at 530.
BALRAMPUR CHINI MILLS (BUY): It has spent 14 year within the trading range of 202 and 29. Currently, the stock is trading at 183 levels and in the process of crossing the level of 202 based on it’s formation of rounding bottom on the monthly chart. Technically multiyear break out of the trading range helps the stock to move further higher. Even if we go through with stocks related to agriculture activity, then we can notice that most of them have already entered in the long term breakout, which is positive for the stock. The strategy should be to buy at current levels and more on dips up to 170 with a final stop loss at 160. On the higher side 200 and 225 seems achievable.
TATA MOTORS (BUY): On a daily basis, the stock is in strong uptrend, whereas it is in the pullback mode on a monthly chart. It was at 605 levels in the year 2016 and went to 63.50 levels during the period of Covid19. After crossing the level of 200, we saw a vertical up move in the stock. It has given a price and volume based breakout, which is significant and along with positive news flow for the stock on a domestic and international basis. Even if we consider 50% retracement from the lower levels then it could reach 330 levels. The strategy should be to buy at current levels and more on dips to 225 levels in the anticipation of support to the electrical vehicle industry. Keep a stop loss at 200 for the same.
(Shrikant Chouhan is Executive Vice President – Equity Technical Research at Kotak Securities. The views expressed are personal. Please consult your financial advisor before investing)