The Indian markets are facing continuous outflow from FIIs, however, the recent decline in the dollar index would help to reverse the same.
By Shrikant Chouhan
Since the beginning of the week, the market is gaining on the theme of economic recovery and a sharp decline in the covid19 active cases. The market players have chosen financials to bet on and the Bank-Nifty jumped to 34000 without any major efforts. We are also witnessing the buying in Commodities and Auto stocks. The Nifty/Sensex has surpassed the levels of 14970 and 15045 (49700/50000) with broad-based participation.
The Nifty/Sensex closed above 14900/49500 on Monday and above 15100/50100 in the previous session. It is definitely positive for the market. We may see consolidation between the levels of 15000/49800 and 15200/50400 as the markets are over stretched in the short term. However, in the near term, it is well poised for hitting 15450/52500 levels, which is the all-time highest level on the indices, and 15600/53000 that could be the final target of the current up-move. Keep a final stop loss at 14850/49300 for initiating any long trade on the indices. Along with financials, particular attention should be paid to capital goods, infrastructure, and commodity-related stocks. The Indian markets are facing continuous outflow from FIIs, however, the recent decline in the dollar index would help to reverse the same. The dollar index is comfortably trading below the levels of 90 and technically we might see the levels of 87.50.
Technical stocks to buy
Larsen & Toubro (L&T)
BUY, CMP: Rs 1,421, TARGET: Rs 1,490, SL: Rs 1,390
In the short term time frame after forming a double top pattern around 1550 zone, the stock went into a gradual downward movement, and eventually post accumulation near support area it turned its move into a rising channel formation with a higher high and higher low series indicating bullish momentum to sustain in coming days.
Larsen & Toubro Infotech (LTI)
BUY, CMP: Rs 3,656, TARGET: Rs 3,840, SL: Rs 3,580
A strong reversal formation is evident near the support area post-formation of the double bottom chart pattern on the daily scale, additionally, a hammer candlestick formation supported by incremental volume, activity is indicating a strong trend reversal from the current levels.
BUY, CMP: Rs 633, TARGET: Rs 665, SL: Rs 620
The stock has given a breakout of its Ascending Triangle chart pattern with decent volume activity on the daily chart, moreover, all major technical trend indicators such as Stochastic and ADX are showing good strength for momentum to sustain. Thus strong bullish move from the current levels is very likely in the coming horizon.
BUY, CMP: Rs 2,914, TARGET: Rs 3,060, SL: Rs 2.850
Post decline from the peaks of 3600, the stock went into an accumulation phase near its multiple support area of 2750-2850, as a result, a good base is formed in that region, and therefore the stock is showing good strength after the breakout of its 20 Days EMA with the rising volume indicating a fresh uptrend in the counter.
(Shrikant Chouhan is Executive Vice President (Equity Technical Research), Kotak Securities. Views expressed are the author’s own.)