While the Nifty spot cleared the 12,000 mark several times during this week, it failed to close above this level. On the downside, 11,800 support is still intact.
For the third consecutive week, the domestic market was spooked by profit-booking at higher levels. Benchmarks have been range bound, whereas the broader markets saw a sell off.
For more than six straight sessions, we have seen a negative market breadth. This week, the Nifty has been trading in a 170-point band and is up 0.61 percent week-on-week.
Meanwhile, the Nifty Bank index has been gradually rising higher and is currently trading with a change of 1.10% from its previous week’s closing price.
While the Nifty spot cleared the 12,000 mark several times during this week, it failed to close above this level. On the downside, 11,800 support is still intact.
So, we can conclude that the index is stuck between 11,800 and 12,000, and only a move on either side will dictate the further trend.
We reiterate our view that until the Nifty closes above 12,000 mark, it’s better to remain extremely stock-specific and avoid going long on index-based stocks.
On the upside, Nifty has the potential to test the 12,200 mark. However, we are of the opinion that traders should start booking profits at higher levels in order to avoid any losses in case of a decisive correction in the market.
On the contrary, a breach of 11,800 might invite further pessimism in the market and the index could shy away from the fresh highs for some more time.
The pricing of Nifty options indicates that the puts are a bit costly than call options, which could possibly be due to the fear of a corrective move in the market.
One buy and two sell stocks for the next one-to-three weeks:
Eicher Motors: Buy | LTP: Rs 21,940 | Target: Rs 24,000 | Stop Loss: Rs 20,800 | Upside: 9.38%.
Recently, the stock rallied from Rs 17,500 to Rs 22,900 in a short span of time and that was followed by a correction towards Rs 21,000.
The stock has been consolidating in the range of Rs 21,000–21,900 for the past couple of weeks.
During the recent session, Eicher Motors broke out from the discussed band with an influential close, which indicates that the upside could resume again.
Traders are advised to buy the stock near Rs 21,900 for the upside target of Rs 24,000 with a stop-loss of Rs 20,800.
Berger Paints: Sell | LTP: Rs 481 | Target: Rs 435 |Stop Loss: Rs 495 | Downside: 9.56%.
Since July 2019, Berger Paints has surged more than 75 percent from the bottom of Rs 300 and has entered an exhaustion zone on the larger degree charts.
At this juncture, the stock is on the verge of a breakdown on the daily chart, which will confirm a short-term change of trend.
The placement of the weekly RSI indicates a possibility of a sharp correction in case of a follow-up selling below Rs 475.
Bajaj Finance: Sell | LTP: Rs 4,121 | Target: Rs 3,860 | Stop Loss: Rs 4,250 | Downside: 6.3%.
Bajaj Finance seems to be getting ready for a descent. At this juncture, the stock is on the verge of a breakdown below Rs 4,120.
The breakdown will confirm a lower top, lower bottom formation, which points towards a change in the short-term trend.
Even the RSI is about to confirm a breakdown. Previously, when this happened, we witnessed a sharp correction in the stock.
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