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Nifty outlook and stock picks by Sameet Chavan: Buy Petronet, sell UBL

Nifty Outlook

After a brief pause in the week starting February 8, our resumed their upward momentum on the first trading day of the last week on the back of global optimism and encouraging macro numbers. The upward move continued on the following day as well to clock fresh record high of 15,431.75. However, at higher levels, most of the heavyweight counters started experiencing some profit-booking, which extended as the week progressed. In this process, the Nifty eventually sneaked below the psychological mark of 15,000 on Friday to snap the weekly winning streak.

For the major part of the week, the market has been experiencing some pressure at higher levels and this is what we have been alluding to in our intra-week commentaries. Technically speaking, this week’s high precisely coincided around the crucial resistance zone of 15,,380 – 15,500 (which is the 161 per cent ‘Golden Ratio’ of the entire fall from Jan’20 highs to March’20 lows). Hence, some sort of pause around it was quite evident. Although, the market has come off a bit in last three sessions, structurally there is no major damage done on the charts. It should merely be considered as a profit booking as of now. Going ahead, we need to keep a close eye on how Nifty behaves around its key support zone of 14,750 – 14,550. Only a sustainable breach of these crucial levels should be considered as a short-term trend reversal. On the flipside, 15,100 – 15,200 would be seen as immediate hurdles and any bounce towards this is most likely to get sold into.

During the week, some of the larger private banking names cooled off a bit after recent marathon rally. The broader market too saw some profit booking towards the fag end. The real action was seen in some of the smaller PSU banking stocks as well as few underperforming marquee PSU counters from the energy space. The coming week is likely to be actioned packed; because are placed interestingly going into the monthly expiry. Traders are advised to stay light and should avoid aggressive bets on the long side.

Stock recommendations:

NSE Scrip Code – PETRONET LNG

View – Bullish

Last Close – Rs. 252.25

Justification – The stock has been in a consolidation mode since the last few years. Within this phase, the buying tends to emerge whenever the stock reaches its lower end; whereas the profit booking starts around the resistance zone. If we take a glance at the daily time frame chart, we can see prices resting around the ‘200-SMA’ for a while now. In the last couple of sessions, the stock prices witnessed a good traction and importantly it’s backed by the more than average daily volumes. Hence, we advise buying this stock for a target of Rs.265 in coming days. The stop loss can be placed at Rs.246.

NSE Scrip Code – ASHOK LEYLAND

View – Bearish

Last Close – Rs. 123.40

Justification – The recent movers saw some decent profit booking towards the fag end of the week. This ‘Automobile’ stock had a spectacular run over the past few months and finally, on Friday; we witnessed first sign of real profit taking. The stock prices slipped convincingly below the ’20-day EMA’ for the first time in the recent past and in the process, the ‘200-SMA’ on hourly chart too got broken. On the indicators reading front, we can see ‘RSI-Smoothened’ oscillator is sloping downwards, which is a sign of short term weakness in the stock. One can look to sell on a bounce for a target of Rs.114 in coming days. The strict stop loss can be placed at Rs.128.60.

NSE Scrip Code – UBL

View – Bearish

Last Close – Rs. 1,217.40

Justification – Last three months have been fabulous for this counter and although it started participating late in market Bull Run, had a good catch up rally. Of late, stock prices slipped into a consolidation mode and with broader market correcting on Friday, this stock finally succumbed to the selling. In the process, the daily charts exhibits a ‘Range Breakdown’ from the multiple time tested support of 1,230 on a closing basis. The momentum oscillator reading too indicates extended profit booking in the stock. Thus, one can look to sell for a target of Rs.1,145 in coming days. The strict stop loss can be placed at Rs.1,258.


Disclaimer: Sameet Chavan is Chief Analyst- Technical & Derivatives at Angel Broking. The analyst may have positions in one or more stocks. Views are personal.

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