Trading ideas: Two stock recommendations for next week

The week went by; proved to be a breather for domestic markets after the stupendous rally of the previous week. The Nifty 50 spot oscillated in a narrow band of merely 200 points and ended flat. The reason for this consolidation could be that the markets are overheated, and another reason may be the truncated week. However, the overall trend is still strong and a breakout above 17,500 would reinforce the bulls to start afresh rally towards 17800. Meanwhile, on the other hand, 17,200 would be intermediate support and a breach of the same might drag the index towards 16,900 mark. So overall all for coming weeks, 16,900 – 17,800 would be a bigger range for the index.

On the sectoral front, the price action indicates that Nifty CPSE, Nifty Auto and Nifty Bank would gain traction in the coming weeks. Specifically, the index Nifty Bank recently confirmed a major breakout on the daily chart and then retested the breakout. Now it is poised to clear a new high once it sustains above 37,150 levels. We expect some outperformance from the above-mentioned sectors. On the downside, the support is placed at 36,000 for the Nifty Bank index. A breach of the same might once again confirm a failed breakout in the index.

Stock recommendations:

PFC | Buy | Stop loss: Rs 126 | Target price: Rs 145

Finally, a multi-year decisive breakout was witnessed in the stock on a larger degree scale. This indicates a fresh round of upside momentum. One should buy the stock around 132 for a better risk-reward ratio.

ITC | Buy | Stop loss: Rs 208 | Target price: Rs 220

The stock is one of the safest stocks since it is sideways in current volatile times. We expect the stock to pick up momentum going ahead. Thus, traders can go long in it with given trade set up.`

(The writer is AVP-technical research at Anand Rathi; views expressed are personal)