As we have been discussing for last two days, Indian Stock Markets have rebounded strongly from their support levels (Nifty: 4850) on Friday. From its lows of 4840, Nifty rebounded strongly to reach the target of 4925 comfortably and closing the day @4931.
Overnight closing on Dow Jones has been good and we may expect Indian Stock Markets to open at decent note on Monday morning. As it is expiry week, hence it is likely that we might see some degree of short covering coming into the markets which may take Nifty close to 5000 levels, where we may see some fresh short positions built in again. The important resistance levels come at 503-5070 range. If this range if breached on closing basis, we may see Nifty going till 5200. But the probability of this happening is unlikely as global factors are still competitive.
Fundamentally also the recession in Europe will likely to affect almost every major weight in Nifty, thus, valuations may not justify too much upside from the current levels.
Thus, it is advised that traders may go long on Nifty within the range 4920-4950 with a target level of 5040-5060 and stop-loss can be placed at 4870. Once Nifty breaches 5040, one may switch to "sell on rise" strategy where one may sell Nifty in 5040-5060 range with stop-loss at 5160 and target price of 4750. Hence, the risk-reward ratio becomes really lucrative in "Sell-on-rise" strategy.
We had advised traders to buy Maruti in 1190-1210 range on Wednesday with target of 1350 and stop-loss at 1140. The stock has rebounded strongly from 1170 to close on friday at 1240. Fundamentally also, the stock is currently trading at attractive levels and can be bought from long-term perspective.
Technically, Sterlite Industries has entered the strong support zone from where it is expected to take a short term bounce. One may buy Sterlite Industries in 620-640 range with target price of 680 and stop loss of 605. Similarly, one may buy Cipla in 316-318 range with target price of 330 and stop-loss of 305.
Options traders can sell Nifty 4400 Put and Nifty 5300 Call for June series with stop-loss at 5350 on the upside and 4350 on the downside.
Before I adieu, I would like to remind everyone that atleast Indian Stock Markets is still in structured bull phase. We are not as leverage as we were in 2007 that further accentuate the fall. We have come out better than the others from the grip of recession. Though the support drivers for the markets to go up are still not intact but downside too is limited. Henceforth, one may try to adopt stock specific approach and buy good quality stock during corrections.
Wishing you a great investing day and the coming week!!! Hopefully, we again meet with big smile on our faces.. He ha ha :)
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