ET Now: The level of 17,500 has broken for the week. Are we headed lower in the coming weeks or can we resume the uptrend?
We should be dragging lower on the indices because there is no respite in terms of index trends or the supports getting lifted. Also, we have not seen a major revival in the global markets; most of the global indices are getting into a drag mode, and the dollar index above the 100 mark is also not helping the cues. We have seen what is happening across the bond markets both India as well as the US markets. So, on the back of all of that, it is a very natural kind of a flow that the markets are ebbing off after that 2000 point plus gains on the Nifty. We are getting into a phase of correction and possibly we could now be looking at a new range on the index. On the downside, 17250 may act as a support and 17,800 could act as a major resistance.
Commodity prices have been rising, and one of the underlying reasons is the big move that we have seen in the crude this year. What is your take on crude? Where are we headed?
I believe that crude should hover around the 100-105 per dollar mark. The last time crude was at 95-96 dollars was in the month of Feb. That is when the crude had started to break out from the 95-odd dollars per barrel mark; the second time it managed to come back to that 95-96 per dollar mark was just about last week or so when crude hit that sub 100 dollars mark. But now we have bounced back quite again. So, this is the third retest of support, and on all of those retests, we have managed to bounce back quite sharply. If this trend persists for crude and we continue to sustain above that 95 dollars per barrel mark, then we could be looking at a possibility where crude may start to spike again. But as of now, we will take it step by step, maybe 105-108 could be a near term range for crude. If it breaks past above 110 per dollar mark, this could be a breakout that could possibly take crude back even to 120 dollars per barrel and higher.
What are your top picks for the coming week?
I am going with some offbeat names over here and looking at the market volatility, I expect a few stocks to try and outperform. ITC looks attractive to me on the charts as it is heading towards a breakout of the Rs 270 mark. It could be a matter of time when the stock breaks out of this mark and starts to close above those levels. Once that happens, the next range on the upside for ITC should be around Rs 295-300 levels. I am expecting at least a 10% upside for ITC provided the stock breaks out of that Rs 270 barrier; the stop loss for this trade could be Rs 255.
is the other name which is looking attractive. It is forming a bullish flag pattern on the daily charts. The stock managed to just about eke out a small breakout of this bullish flag pattern but more importantly on the technical front if we look at the Ichimoku studies and the stock has provided a breakout after almost months of being into a sluggish trend for itself. This stock is a buy with a target of Rs 2,775 and stop loss to be kept at Rs 2,475.
There was a big up move in a lot of these sectors like power, defence, industrial names. Even saw a strong move. Does any name from these sectors looks interesting to you?
From the defence space, BEL has been one of the better-moving stocks. That stock has done exceptionally well. It has seen a very subtle kind of breakout above that Rs 215-216 mark. The stock took a lot of time but once that hurdle was crossed, we saw the stock coming back towards even Rs 235-240 range this week. So I think that has been one of the more interesting names. Thermax has done exceptionally well, with an 8-10% move in a single trading session. It has also confirmed a breakout on the charts, possibly an upside of another 5-7% over the very near term could be possible for this as well.