Broader indices are likely to consolidate further. Divergence exist as the Nifty appears headed to the 10,800 mark, while smallcaps and midcaps continue to trade lower, indicating breadth is exhausted in that space.
Financials dragged the Nifty into a consolidation phase on Tuesday. This may give the bulls an opportunity in the short term to stage a smart bounceback.
The market witnessed a second consecutive day of selling pressure after opening, but managed to close above the 10,700 mark.
Broader indices are likely to consolidate further. Divergence exist as the Nifty appears headed to the 10,800 mark, while smallcaps and midcaps continue to trade lower, indicating breadth is exhausted in that space.
Heavyweight sector - financials – has been a laggard. Since last week we are seeing stiff rangebound trading in the Bank Nifty between 26,100 and 26,600.
Investors are jittery over continuous outflows from foreign portfolio investors (FPIs) and foreign institutional investors (FII). It has been a decent upward momentum of almost 10 percent but we have now seeing some outflows. On the flipside, we have seen higher participation from domestic institutional investors (DII) in the last couple of months which is a positive sign.
Given the overall trend, the Nifty is well supported at 10,650–10,640 zones. The Bank Nifty has strong support at the 26,000 mark. We would recommend that investors do not initiate any fresh positions in the medium term as long as key supports are not breached.
Kaveri Seed Ltd: Buy| LTP: Rs 583.75 | Target: Rs 625| Stop loss: Rs 565| Return 7%
The stock has given a breakout after a long consolidation which started in early 2018. A close above resistance zone of previous peaks and higher volume participation is likely to keep the bullish momentum. The upward target for the stock is placed at Rs 625 - 630.
Lupin Ltd: Sell| LTP: Rs 901.10| Target: Rs 855| Stop loss: Rs 925| Return 5%
The stock has seen a short covering move in the last couple of days while the overall trend for this pharma sector remains bearish. The short-term and momentum is showing divergence which may not augur well for the bulls.
A reversal pattern is also seen on the daily chart indicating a resumption in the downside momentum which may drag the stock towards Rs 855.
Motherson Sumi Ltd: Buy| LTP: Rs 310.60 |Target: Rs 340| Stop loss: Rs 295| Return 10%
The stock has made a bullish engulfing pattern on the daily chart. Further, this support marks resulted in a triple bottom formation making it attractive at present levels. A bullish formation at such support gives an opportunity for investors to ride the bullish trend for a target of Rs 340.
Disclaimer: The author is CEO, Epic Research. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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