Nifty Outlook: 17600 and 17450 levels are key levels to watch

The festive week that was truncated didn’t witness a major move and benchmark index Nifty ended with gains just under a percent against the previous week’s closing. One can say that the bulls had a sigh of relief after the sharp selloff that we saw in the previous two weeks. Generally, it has been seen that markets don’t fall during the Diwali week and this rationale has again proved its point this time. However, post Diwali we generally get to see trended moves that can be on either side and hence it would be crucial to see how markets react post the long weekend.

Technically if we see the benchmark created a lower top lower bottom on the previous Friday when it breached the key levels of 18000. In addition to that prices also breached the key support of short term moving average of 20SMA that as well placed around the 18000 mark.

During the bounce back seen in the truncated week; this 18000 – 18050 level acted as a stiff barrier and going ahead as long we don’t see a close back of 18000 – 18100 its better to keep light on the long positions. For the Bank Nifty as well, the levels around the 40000 acted as a stiff resistance and in spite of prices fidgeting around it for the major part of the week, it eventually ended well below it. Hence, 18000 and 40000 will be the key levels to watch out for Nifty and Bank Nifty respectively.

On the flip side, 17600 and 17450 levels are the key levels to watch out for the Nifty. Traders can opt for stock specific trades as we have been witnessing strong out performance from individual space.

Stock recommendations

1.  NSE Scrip Code – GODREJPROP

View                  –   Bullish

Last Close          –   Rs.2428.45

The Realty space had a stand-out performance during the truncated week and ever since the Realty Index has come out of its last 10 years trading range any dip in this basket is easily getting bought into.

This front line counter from this segment has as well given a remarkable performance in recent time and seeing the price structure it seems there’s even more in the offering. In the month of September, the stock prices had a splendor rally that was seen with a huge increase in volume however post that the prices witnessed a very range bound move with low volume. This is a copybook characteristic of a time-wise correction. During the week gone by, we witnessed a spike in volume along with a strong up move in prices indicating a resumption of the primary uptrend.

Moreover, multiple time frame analysis with Monthly RSI as well Weekly RSI above 80 and Daily RSI bouncing after testing 50 indicates an entry opportunity in the counter that is a strong outperformer. Based on the trend of the sector and with the above evidence we recommend a buy in this counter at current levels for a near term target of Rs. 2790. The stop loss can be placed below Rs. 2230.

2.  NSE Scrip Code – KPRMILL

View                  –   Bullish

Last Close          –   Rs. 494.10

The stock prices are in a strong uptrend as they are moving in a higher top higher bottom price formation. Since last one year, more than five times prices have formed higher bottom on the support of 50SMA and has bounced with a good increase in volume. The recent correction as well got arrested around this key average and we have witnessed a good up move in the last couple of weeks supported with increasing volumes. The prices have now given a bullish range breakout and we are seeing the highest closing. The momentum oscillator i.e. RSI as well is positively placed supporting the buy signal. We sense this out performance to continue and hence we recommend a buy at current levels for a short term target of Rs. 560. The stop loss can be placed at Rs. 460.

(The author is Technical Analyst at Angel Broking; views expressed are personal)