Half a per cent on Thursday, one per cent on Friday, yes you could talk about the fact that we ebbed off just a wee bit from the top but managed to hold around 10,350 on the futures for the large part of Friday’s trading session. What is next? How critical will be that first lap of Monday’s trading session before the election results are out?
The first lap would be very critical not just in terms of the outcome, because that will have impact on the short-term trends for the index but also in terms of levels as well and last week we were discussing and highlighting how that 10,350 odd mark on the Nifty could act as some sort of hurdle on the index.
There was a bit of catch up or an outperformance on Bank Nifty which we saw last week. The recovery on the index was also very good but we were unable to breach that level and that too on two successive positive closings both on Thursday and Friday. The recovery was very good on Thursday and Friday and we managed to gain strength on that. Had we broken that convincingly, then the texture of the markets would have improved technically.
Post the results, if the reaction is not negative, then the markets would resume the uptrend. But if it is negative and the index cows down and does not break the previous high, then you could be talking of a formation of lower highs and lower lows. We are at a critical point and the markets are factoring in that and I believe that the trend for the Nifty would be the next 100 points. Whether we are 100 points up or whether we closed 100 points down from Friday’s closing, that would determine the next set of short term trend on the index.
Last week, you were highlighting how the leadership has remained with HDFC Bank and after Friday’s move, that only gets dominant play?
Exactly and that quality which HDFC Bank has not just in terms of the price structure but the support which it lends to the index, is remarkable. A lot of large caps keep on participating at every phase of rally but there are a very few large caps which participate consistently across a particular rally and HDFC Bank is one of those large caps.
The last two days, if I am not wrong on Thursday and Friday of last week, the stock recovered almost Rs 70-80 and look at what happened to the index as well. Indices also managed to rally on the back of that. That’s why I believe if there is a re-rating on the positive side for HDFC Bank, then you are looking at a much higher potential target for the indices as well going forward.
What are the stocks that you are betting on next week?
I would maintain a positive and there are two stocks which I am recommending. First is Jet Airways. Now the stock has been trading with a very strong momentum. The volumes have substantially increased for the stock in the last three months odd. The stock on Friday as well managed to stage a swing breakout. Jet Airways is a buy with a positional target of Rs 780, stop loss to be kept at Rs 670.
The second is a buy on Castrol. I would sense that this is one of the few stocks which is trying to break out of its long-term downward sloping trend line. The last few days and weeks have been pretty good in terms of the price and volume action. I would suggest a buy with a short-term target of Rs 430 and a stop loss at Rs 405.
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