Action packed week; bulls claim the upper hand

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The week started with a big bang as the news of HDFCBANK and HDFCLTD merger created optimism in the market. On Monday, Nifty went on to close above 18100 comfortably however post that the follow-up move was missing and the next 3 sessions it slipped back to erase Monday’s strong gains. On Friday, Key RBI policy was announced and market gave a thumbs up as there was a good broad based buying seen after testing precise 17600 to eventually end tad below 17800 with a weekly gains of 0.64%

Even though it was an action packed week, there was no major change on a closing basis and since markets defended key supports our bias remains positive. The coming week being a truncated one with just three trading sessions upfront we don’t expect a major move and sense Index to remain in a range. For the coming week, we sense strong support around 17600 followed by 17400 and as long these levels hold traders are advised to use dips as a buying opportunity. On the higher side, 18000 – 18100 is the immediate resistance to watch out for. The midcap basket continued to buzz even when the benchmark was sulking during the mid-week hence individual stocks have got relative strength which is why traders should focus on stock specific approach during the truncated week.

Stock recommendations:

NSE Scrip Code – M&M

View – Bullish

Last Close – Rs. 857.40

Justification – During the March month, stock prices witnessed a strong bounce back from the lower levels to form a bullish reversal candle stick pattern known as ‘HAMMER’. Now the April month as well has started on a strong note and on the weekly chart we are witnessing a trendline breakout joining all time high and major swing high. In addition, prices have closed above the 200SMA after a long time and now indicates a change in polarity. Momentum oscillators are positive placed supporting the buy call. Looking at positive scenario across all major time frames we recommend a buy in this counter at current levels for a near term target of Rs. 920. The stop loss can be placed at Rs. 827.

2.  NSE Scrip Code – DRREDDY

 

View                  –   Bullish

Last Close          –   Rs. 4430.35

Justification – On daily chart, stock prices have witnessed a strong bullish reversal pattern known as ‘Inverse Head and Shoulder’. In addition, for the last couple of weeks the stock prices were gyrating within a very thin range of 100 points between 89EMA & 50SMA and prices have now closed above this range on the higher side confirming a ‘FLAG’ pattern. Moreover volume analysis indicates good increase in volume during the upmove as compared to volumes during down move indicating accumulation in this counter. With all the above evidence into consideration, we recommend a buy at current levels for a near term target of Rs. 4750. The stop loss can be placed at Rs. 4270.