What are you making of the week gone by and what should one watch out for now?
It was a tough week for the markets. In the first half of the week, we saw some brutal selling, which usually would happen in some sharp intraday volatility. We saw 800-1,000 points swings on the Bank Nifty and these are very sharp swings. But when you look at it on a net-basis, a weekly cut of 1.5% on the Nifty as well as Bank Nifty is not a major dent as such.
I think short-term traders would probably take it with both hands because there are a lot of positives in the week gone by. On Friday, you saw some very strong comeback from key names; particularly the banking stocks. The Bank Nifty made a comeback and you saw largecap private sector banks making a strong comeback; especially the likes of HDFC Bank, Axis Bank and ICICI Bank made some good strides and then there were many sectors, which did pretty well.
Nobody is talking too much about the cement stocks, but look at the rally in the stocks like Ambuja Cements, ACC, UltraTech and Shree Cement. Many of these stocks have either crossed or are at 52-week highs or multi month highs as the case may be.
Then you had metal stocks as well which did exceptionally well. The real estate pack did pretty well too. I think when you have such a mix where new sectors and new stocks breakout, I think traders would generally take the market correction in a positive stride as there will be a lot of stocks for traders to try and play or trade around even if it is a positive bias. When such a market generally sees a marginal mean reversion or consolidation in process, the stock-specific move or the market breadth generally improves in these kinds of consolidations.
Any stock picks that you would like to leave us with today?
One of the themes which you were discussing extensively right throughout Friday was metal stocks. The first one which I am selecting is a buy on Tata Steel. It has seen a very strong breakout on the charts and there are some multi-time frame chart analysis. In the early time frame, there is a continuation investment and it is seeing a head and shoulder breakout as well as some strong breakout patterns. These are some indicators for Tata Steel in the short term as well as the medium term charts on the weekly as well as the monthly time frame. I would suggest a buy for this stock and short-term traders could look at Rs 420 as a target and stop loss at Rs 380.
The second would be a buy on Cummins India. I think even this stock is showing some very good resilience in price up move in the last three-four days. It has come back to break above its swing resistance at about Rs 460 levels. I think Cummins India could be a very interesting pick and I believe that the stock should chart back its way up higher towards Rs 480 levels, which was a previous swing high. So a buy on Cummins as well with a target of Rs 480 plus and stop loss to be kept at Rs 448.
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