• PGEL: Buy above: ₹830 | Stop: ₹855 | Target: ₹890-910
• GABRIEL: Buy above: ₹480 | Stop: ₹468 | Target: ₹515-530
• J&K BANK: Buy at: ₹101.50 | Stop: ₹99.50 | Target: ₹107-110
The stock market on 21 February: A recap
Nifty has been on a roller coaster ride. After its sharp collapse seen a few weeks ago, the benchmark index’s attempt to rebound has been quite weak. Last week, we mentioned that the markets were poised at an interesting stage. Ever since the start of the series the broader indices showed a willingness to rebound. But a steady failure at moving higher in the February series has spoilt the sentiment.
The Reserve Bank of India did not offer much rope in its recent policy by introducing a rate cut that was already anticipated. Hence, the market would now move on to triggers emanating from the macro numbers. Auto sales have not been encouraging. With the other numbers also disappointing the markets, we may end up having a bearish closing to this expiry in a few days.
Bank Nifty too has displayed a lack of upward traction, generating widespread disappointment.
The market has been largely volatile also as participants were getting mixed signals about the government’s initiative to improve the fiscal deficit.
Last week, we were looking for a rally to emerge. Since the fall has been widespread, it is quite possible that many stocks may also participate in a rally, if any. However, limited reactions seen in the last few days have poured cold water, and the failure of the Nifty to close beyond 23,000 points has triggered some panic.
Trading outlook
As the index continues to deteriorate and challenge the former lows of January after repeated tests, the danger of the markets heading much lower emerges. A possible recovery seems a bit difficult considering that news flow has been limited and valuations are still a concern for the big boys of the market.
Also, the economy has been stalling for some time and criticism of the government has started increasing in its stridency. RBI’s recent action also did not help matters and suggested that the central bank was playing safe, watching the economy for signs of improvement.
Under these circumstances, it is better to take a stock-specific approach. The index may remain range-bound and one can set a stop below 22,700 levels on bullish positions for now. The weekly chart of the Nifty shows a fresh downward momentum. The possibility of a move below Friday’s low could garner more selling interest. Hence, we decided to step into the daily timeframe to ascertain the exact plan of action.
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The daily chart shows that the steady rise seen in February has dissipated quite quickly and the lows of January have broken, indicating that a new decline is beginning.
The revival attempts have now hit a roadblock and the breach of the important supports at 22,800 could prove to be a tough challenge in the coming days as the possibility of overcoming an additional Fibonacci resistance also at the 23,000 will be a daunting task for the Nifty.
Hence, it’s best to retain the bearish bias as the possibility of Nifty witnessing a rebound seems limited at the moment. The key levels in Nifty are a close above 23,000, and on the lower side, a close below Friday’s low of around 22,700, which would once again lead to a resignation by the bullish camp.
Three stocks to trade, recommended by NeoTrader’s Raja Venkatraman
• PGEL: Buy above: ₹830 | Stop: ₹855 | Target: ₹890-910
This counter from the electronics industry has been making a base around the MA Bands, indicating the possibility of a revival after a while. Last week’s action highlights that the rise in prices supported by volume could now result in some revival. The RSI shows some positive divergence, again indicating that the trends are on a revival mode and could set some pace to the upside. Buy.
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• GABRIEL: Buy above: ₹480 | Stop: ₹468 | Target: ₹515-530
The prices dipped into the Moving Average Bands and are seen showing some bullish signatures. The momentum readings are also showing a revival from neutral zones, which could help the prices rise quickly. As trends are looking promising with the formation of a long body candle, one can look to go long for the next few days. Buy.
• J&K BANK: Buy at: ₹101.50 | Stop: ₹99.50 | Target: ₹107-110
This banking counter managed to stay afloat during the recent capitulation, indicating some steady buying interest developing at lower levels as the supports offered by the neutral zone of RSI clearly spell out that the trends are showing some revival again. With the possibility of some upward bounce emerging, one can consider going long as there is room to the upside.
Raja Venkatraman is co-founder, NeoTrader.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
