Analyst: Dharmesh Shah – Head Technical
The weekly price action formed Doji candle with a long lower shadow as the index recovered more than 600 points from the intraweek low (13,131), highlighting strong buying demand at the 61.8% retracement of the previous up move. Going ahead, we expect the index to head towards 14,200 by January as it is the 138.2% external retracement of the entire CY20 decline (12,430-7,511).
Supported by revolving sectoral participation and strong market breadth, currently all the Nifty constituents are trading above their 200-day SMA. Broader Market is expected to continue with its outperformance as currently 96% components of midcap and smallcap indices are trading above their 200-day SMA compared to November reading of 90, signifying inherent strength and durability of the current up move.
Analyst: Dharmesh Shah – Head Technical
| Stock | Reco. | CMP (Rs) | Target (Rs) |
Stop Loss (Rs) | Note |
| Infosys | Buy | 1,240 | 1,340 | 1,184 | The stock during last week has generated a breakout above the last 10 weeks’ range (Rs 1,186-1,051) and MACD in buy mode |
| Dabur India | Buy | 525 | 565 | 498 | Stock resuming fresh up move after a higher base at the rising demand line and 52-week EMA thus offers favourable risk reward set up |
| HDFC Life | Sell | 678 | 738 | 644 | A bullish flag breakout and a faster retracement of the last falling segment and RSI in buy mode |
F&O Strategy
Analyst: Raj Deepak Singh, Head Derivatives
Buy Sun Pharma
- CMP: Rs 587
- Target: Rs 630
- Stop loss: Rs 558
Rationale:
Pharma stocks remained in focus last week where Sun Pharma gave fresh breakout above Rs 580 levels on the back of short covering. Long rollovers were seen in the stock on Friday as roll spread rose marginally.
ATM Call strike of Rs 580 holds the highest shares for the January series. We believe as the series progresses, additions would shift in OTM strike Calls, which will be positive for the stock.
Buy Dabur India
- CMP: Rs 526
- Target: Rs 552
- Stop loss: Rs 508
Rationale:
The current open interest in Dabur is significantly high and is at a two-year high. OI in the stock has increased more than 60% since the July series. We believe this accumulation was formed in August until November month. Despite weakness being seen in the stock during November and December, it did not prompt any major short additions.
With the stock surpassing its major resistance levels of Rs 520, we expect fresh longs to be seen in the stock.
Forex Strategy
Buy USD-INR
Sell USD-INR at 73.80-73.85
- Target: 73.40
- Stop loss: 74.00
Rationale:
The rupee continued to appreciate last week on the back of positive inflows.
Lesser than expected stimulus in the US pushed the Dollar index higher. However, it’s likely to retrace towards 90, which will help EM currencies to appreciate.
| Resistance | 73.85 | 74.00 | 74.1 |
| Support | 73.60 | 73.50 | 73.40 |
Sell GBP-INR
Sell GBP-INR at 99.60-98.70
- Target: 98.40
- Stop loss: 100.10
Rationale:
GBP-USD is finding resistance near 1.36 levels despite the UK and EU agreeing on a historic trade deal.
Profit booking is seen in GBPINR pairs as it approaches 100 levels and is likely to retrace further.
| Resistance | 99.70 | 99.90 | 100.10 |
| Support | 98.80 | 98.60 | 98.40 |
