On Wednesday, if the market falls below 20 days SMA, which is around 17500, we should be a contra buyer for a short period
By Shrikant Chouhan
Indian stocks tumbled on Tuesday after a jump in treasury yields. Any oversupply in Treasury yields indicates a rise in commodity prices and global investors start exiting from emerging markets with a view that negative effects of the Federal Reserve’s tapering on the emerging markets. Below the 17800 level, the Nifty fell relentlessly. The Nifty touched the 17576 level during the day, which was unexpected. Bank Nifty touched the level of 37315. However, both indices recovered significantly in the last half hour of trading and closed at 17748 and 37945, respectively. Tuesday’s lowest level would be the short-term trend-setting level and below that we would see further declines.
From the 15500 level, 10-day SMA support served as the main support level. On Tuesday, even though the market has gone below the 10-day SMA support, the Nifty has managed to close above it. Before expiration, we should focus on 10 days SMA and 20 days SMA. On Wednesday, if the market falls below 20 days SMA, which is around 17500, we should be a contra buyer for a short period. On the higher side of the view, there will be major resistance levels for the 17800 and 17850 Nifty. Till the market is not crossing 17950, traders should reduce weak long positions at resistance levels. The Pharmaceutical stocks should do well in the medium term.
Stocks to buy
Sun Pharmaceutical Industries
BUY, CMP: Rs 775.1, TARGET: Rs 815, SL: Rs 757
On the monthly scale, the stock has presented a robust rally, after a breather of few trading sessions, it has taken a pause in the momentum within a range. Currently, the counter is trading near the lower boundary of the range which indicates reversal from current levels.
BUY, CMP 503.25, TARGET 530, SL 491
The stock has presented an incredible up move in the last many months and it is trading in a Rising Channel continuously. The Higher High and Higher Low chart patterns are apparent in the counter. Therefore upward movement from the current level is very likely to remain in the near term.
BUY, CMP 163.7, TARGET 172, SL 159
On the weekly scale, the stock is trading in an Ascending Triangle chart formation and a breakout from the pattern is very likely in the coming session for further upward movement.
BUY, CMP 4003.65, TARGET 4205, SL 3920
Post strong upward rally, the stock had witnessed a gradual down move and any minor correction is seen as a buying opportunity. The stock has found support in its demand zone, hence we expect the rising trend to persist from the current levels in the short term
(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Views expressed are the author’s own.)