Trading ideas: Two stock recommendations for coming week

Finally, we witnessed the much-awaited explosive move in the domestic markets. In our previous article, we clearly mentioned that there is a squeeze in Bollinger Band and that indicates a possibility of momentum in the markets. In line with that, the NSE Nifty index managed to break out from the hurdle of 16,000 to create a new life high of 16,350. Eventually, the index closed with a gain of over 3%.

For the coming weeks, we maintain our stance that short term traders should keep booking their long positions since few data points indicate that there is a possibility of a temporary top near 16,500. Well, that needs confirmation but if we look at the VIX then it has turned from its all-time support zone of 12-10. The volatility index (VIX) suggests that the consolidation phase is about to end and markets might turn volatile going ahead. Thus, we advise short term traders to stay extremely selective while picking up long bets and remain vigilant in case of any ambiguity going further. Investors should wait for a significant dip in stocks to create fresh longs. On the downside, as per the change of parity, the support is now shifted to 16,000 and a breach of the same might halt the momentum.

At last, we witnessed the momentum in the Nifty Bank index. Although, it broke above the level of 35,800 but if failed to sustain above 36,000-mark. Going ahead, a sustainable move above the 36,000-mark could propel the index towards lifetime highs of 37,700 and also towards the 40,000-mark. On the downside, 34,500 could be a major decisive support for the coming weeks. A breach of the same might result in it strong selling pressure in the banking space which could drag the index towards 33,000.

Recommendations:

ACC | Sell | Stop loss: Rs 2,450 | Target price: Rs 2,225
The stock has turned from the golden ratio (i.e. 161.8% retracement) on the larger degree chart. Traders can sell the stock only on bounce near Rs 2,375.

PFC | Buy | Stop loss: Rs 125 | Target price: Rs 148
The stock is on the verge of a multi-year breakout. A close above Rs 135 could propel the up move in the stock.

(The writer is AVP-technical research at Anand Rathi. Views expressed are personal)