49121In view of reduced inflation and expenses, will it be right to invest in IT stocks?

Yet again, the bulls managed to display their presence on the D-Street despite the volatility throughout the week. In our previous weekly article, we discussed the strong support of 15,450 for the Nifty spot and had a view that if the support is held we might be reaching towards a new high. Well, the domestic equity market respected that support and Nifty closed near the 15,900 mark. Eventually, the index concluded the week with gains of 1.13%.

We maintain our stance that till the time 15,450 is not breached, there is a possibility of a new high of even 16,000 or more levels.

Above 16,000, there could be a short squeeze that could take the index further up. However, that would be the time when traders should start booking their long as we are of the opinion that we are in the last leg of the rally.

With regards to the Nifty Bank index, the level of 33,900 acted as a support during the week. Now at this juncture, the index is on the verge of a breakout, which will be confirmed above 35,800. A move above the same might reinforce the banking and financial pack to outperform. The support on the downside would still be at 33,900 but on the upside, we could even see 37,000. It seems like the banks are last to enter the party, after which we could see some corrective moves. Here are two stock recommendations for the next week.

Ipca Labs | Buy | Stop loss: Rs 1,965 | Target price: Rs 2,110

The counter found support at the placement of 200-Day Simple Moving Average and there could be a bounce from here on. One can buy this stock for the short term.

Reliance Industries | Buy | Stop loss: Rs 2,040 | Target price: Rs 2,220

Shares of energy-to-telecom behemoth look lucrative after the recent correction. It is hovering above the extension of the previous trend line breakout.

(The writer is AVP, technical research at Anand Rathi. Views expressed are personal)