Time to move to largecaps? Here are two bluest of bluechip stocks for this week

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Last week was action-packed for the Dalal Street. However, there was nothing much to celebrate despite the benchmarks reaching life high. The NSE Nifty index maintained its upward trajectory to reach the milestone of 16,500 but very that happened with the help of a handful of stock. The index gained over 1.5% from its previous week’s close but if we look at the broader markets then there was a heavy selloff. The Nifty Midcap 100 index and Nifty Smallcap 100 corrected by over 5% during the first few sessions of the week and recouped some of the losses as the week progressed.

For quite some time we have been maintaining our cautious stance on the markets and if not the benchmarks but the stocks moved in line with our expectations. If we talk about the levels then it would be difficult to predict where the momentum in Nifty might get arrested since it is now in uncharted territory but all we can say is there is some more fuel left. Many heavyweights are giving fresh hints of breakout and that is the reason why Nifty could even show 16,600-16,800 in the coming week. However, we remain sceptical on the participation from the broader markets and thus traders again have to place their bets on the front line. On the downside, the support is now shifted to 16,150 and a breach of the same might halt the momentum.

The Nifty Bank index has again disappointed the traders. The index underperformed last week and gained just over half a per cent. Going ahead, sustainable move above 36,300-mark could propel the index towards lifetime highs of 37,700 and also towards 40,000-mark. On the downside, 35,500 could be a major decisive support for the coming weeks. A breach of the same might result in strong selling pressure in the banking space which could drag the index towards 34,000.

Stock recommendations:

HDFC Bank | Buy | Stop loss: Rs 1,480 | Target price: Rs 1,575

We are witnessing a trend line breakout on the daily chart of HDFC Bank. We expect the stock to catch up with its peers like ICICI Bank and Axis Bank.

Reliance Industries | Buy | Stop loss: Rs 2,060 | Target price: Rs 2,250

Even Reliance Industries has confirmed a trend line breakout and it is on the verge of crossing its previous swing high. One can buy the stock on dips near Rs 2,125 for a better risk-reward.

(The writer is AVP-Technical Research, Anand Rathi Share and Stock Brokers)