Mr. Mustafa Nadeem, CEO, Epic Research
Nifty ends the week on flat basis making a Doji pattern as indecisiveness near all-time highs mounted on the back of mixed global cues. Profit booking was seen and consolidation in a small range of 10930 to 11080 was observed.
The week for Nifty was sideways due to mixed cues from global markets as despite positive momentum in leading indices we have seen some profit booking due to higher inflation numbers. This also pointed to concerns of another rate hike by the RBI in its August meet. The Trade war concerns further mounted as a threat of it escalating further between US and China may push commodity prices higher. This would lead to higher pricing of commodities such as Crude. No confidence motion in the parliament, higher inflation numbers also weighed on investors.
Nifty on daily chart seems to be similar to a flag pattern which indicates the range play between 11080 and 10970. A closing beyond these levels indicates the momentum to be better. Since structurally we are in a bullish trend; with leading indicators showing strength, we suggest to stay with the trend in near term as a closing above 11080 or sustaining the same level for few hours would call out all the bulls. The resistance on the upside is 11170 while support is now established at 10930.
The derivatives data suggest the range between 10900 - 11100 while a higher addition in 11200 - 11300 indicates fresh long built up while 10900 strikes have seen some fresh writing.
On the fundamentals, we have heavyweights results lined up in the coming week such as LT, Maruti, Heromoto, Yes Bank, ITC and HDFC Bank. Further to point out, the current rally is structurally on the back of buying in heavyweights. We will also be seeing expiry that will further fuel the volatility and could hurt the traders and investors. Infrastructure output is expected in next week which has been on down move in the last couple of months and was at 3.6% in May.
Given overall factors, we seem to be poised with a bullish undertone and suggest to maintain the buy on dips strategy with higher targets of 11400 - 11500.
CEAT - Ahead of good Q1 results stock has surged nearly 9% in intraday. The stock has also given a breakout of double bottom chart pattern on the daily chart and given closing above the neckline. We recommend buying from the current level for the target of 1400 with the stop loss of 1310.
JUBLFOOD - After a long consolidation phase stock has given a successful breakout with huge volumes on closing basis of 52 week high. The RSI is also showing strength on the daily chart. We recommend buying from the current level for the target of 1510 with the stop loss of 1470.
HEXAWARE - Stock is in a consolidation phase for 2 weeks. It took the support of the trend line on daily chart. The RSI is showing good strength by trend line on daily chart. We recommend buying from the current level for the target of 550 with the stop loss of 475.