It was a topsy-turvy ride this week. We saw major cuts especially on the expiry day, we saw that huge gash down, but overall it does look like we are in a steady shape?
We are into a steady market so far. 17,500-18,000 is where Nifty suggests about trying to dabble so probably trying to get into a consolidation. This week, I think the bigger highlight for the markets was the comeback of the midcaps and smallcaps. They may see a very strong comeback so largely the indices remain a bit more volatile but then the midcaps and the small caps manage to perk up quite well.
If the Nifty breaks below that 17,500 mark, assuming post the event next week that I believe could probably be a trigger signal for the markets that we could be in for some further correction. So after a 2,700-2,800 point rally on the index, a 500 consolidation I think it is just about absolutely normal.
When we look at the markets from a macro perspective, crude is once again inching higher and it now seems to be over $100 per barrel mark. What kind of an impact are the markets going to have when it comes to India?
Markets are now taking cognisance of the two very strong asset classes which have a lot of impact on global equities as well as many of the other global asset classes. That is where the risk has come back again into the markets.
Till last week or so there was no major signs of reversal or a breakout into these kind of asset classes, but then start of this week when the dollar index managed to come back towards 109 odd mark and crude just around that 94-95 first and then managing to rally from those levels is where the markets have gotten a lot more cognisance of this kind of risks so the markets are trying to pricing a risk over here at current levels.
Now what matters for the indices is that how strong can this trend be for both these asset classes for example if dollar index breaks past above 110 level if crude comes back to say $105-$107 per barrel mark those could be trigger points where the markets may probably try and factoring the risk quite quickly and you may go into a more sharper correction on the downside.
But then I believe that it is far more prudent to look out for the technicals and then wait out for the levels to be confirmed as a breakdown that could be the much more stronger trigger point and that comes back closer to that 17,500 mark again.
What is your take on when it comes to the technical charts because the stock has almost been sleeping in the past five days. It is just a flat move for particularly and apart from that coming next week which are the counters that you are looking at?
For Reliance, I would believe that the stock has this tendency of going into a time-wise, price-wise correction – Consolidation with no major upswings. What the stock has shown in the last two and a half odd months is redefining the range for itself so from I think Rs 2,750 is where the correction started off for Reliance Industries to almost Rs 2,350 odd levels where the stock bottomed out and now it has come back to the middle point of this range just around that Rs 2,600 odd mark for Reliance Industries. I believe that is where the stock is consolidating may probably consolidate for a couple of weeks assuming the market also remains to be into a range.
Now two buy calls which I would want to suggest and expecting that the reaction on the markets post the Fed meet would be a bit on the positive side so two buy calls in that anticipation.
First one is a buy on Lal Path Labs I think the stock is looking quite charged up. Thursday and Friday the stock closed with a very strong positive bias.
I had mentioned this as a BT/ST call as well but I think looks very attractive from a short term play targets to be kept at Rs 2,780 stop loss could be kept at Rs 2,600 mark for Lal Path Labs.
Second would be a buy on
the stock forming a V-shaped recovery on the short term charts breaking past above that Rs 1,900 level and closing above that as well so buy with a target of Rs 2,000 stop loss at Rs 1,850.