Trading ideas: Two stock recommendations for next week

In our previous weekly article, we mentioned that if the Nifty holds on to the support of 16,376 then the bulls might retaliate and pull the index towards a new life high. In line with our view, the index gradually inched higher during the week to register a new high of 16,722. In fact, the index closed above 16,700 with a gain of over 1.5% from its previous week’s close.

The shooting star candlestick pattern which was formed during the previous week has been negated and Nifty surpassed its high. Now going ahead, the index has the potential to reach the milestone of 17,000. The view would be negated only on a breach of 16,376. Before that, the intermediate support is at 16,500. On the daily chart of Nifty, we are witnessing a negative divergence in RSI and that is why we reiterate our view that from here on things would get more difficult for unidirectional traders since markets could remain choppy as well as volatile. Thus traders are advised to stay light from here on.

The Nifty Bank index slightly outperformed the benchmarks during the week gone by. It ended near the 35,700-mark with a gain of around 1.7%. The weekly chart of Nifty Bank depicts that it turned from the placement of rising trend line which is formed by joining the swing lows of 34,115 and 30,405. Going ahead a breach of a weekly low of 34,817 might further intensify the selling pressure in the Nifty Bank. On the contrary, only a move above 36,300 would bring some hope of a new high in the coming sessions for the banking index

Stock recommendations:

Bank of Baroda | Buy | Stop loss: Rs 72 | Target price: Rs 81
The stock is turning from the support of Rs 72 which is the placement of 200 DSMA and also 200 DEMA. The risk-reward ratio looks favourable to go long at this point in time. Traders can go long only above Rs 75.

DLF | Buy | Stop loss: Rs 305 | Target price: Rs 334
The stock has retested its major breakout zone and is not turning higher. The entire realty pack is witnessing some buying traction. Thus traders are advised to buy DLF only above Rs 315 for some bounce.

(The writer is Mehul Kothari, AVP, technical research, Anand Rathi; views expressed are personal)