Special to Firstpost
S&P CNX Nifty (5,577.65): It was quite an eventful week for the domestic as well as global markets. The huge spike on Friday pushed the Nifty index decisively past the key resistance level of 5,450. This has confirmed the sequence of higher tops and higher bottoms off the 4 June low of 4,770.
Now that the resistance has been overwhelmed, the index is now headed to the next target of 5,750-5,800 and the recent swing low at 5,215 would now become the reference point for the bullish camp. The short-term outlook would turn bearish only if the index falls below this swing low.
As long as the 5,215-level is intact, it would be reasonable to expect the current recovery to extend up to the major resistance at 5,950-6,000. While a lot of traders may be cursing themselves for having missed this rally, it does make sense to rush in and pile up long positions after such a huge spike.
Price tends to breathe and after such a huge move it is reasonable to expect a pull-back. The erstwhile resistance at 5,400-5,450 would be an area to hunt for long positions, for a trip to at least 5,800.
CNX Bank Index (10,642.90): The sharp recovery in this index was the key trigger for the rally in the Nifty. In line with expectations, the Bank Index hit the target of 10,350. But, unlike the Nifty, this index is yet to clear its bullish trigger level of 10,950.
A breakout past this key resistance at 10,950 would indicate a further upside potential for the index as well as banking stocks. Above 10,950, the index could rally to 11,850-11,900 range.
Any fall, triggered by a possible disappointment post the Reserve Bank of India’s policy meet on Monday, would be a nice buying opportunity in banking stocks. The likes of IDFC, State Bank of India, Bank of Baroda and Punjab National Bank come to mind readily as candidates that may be bought on dips.
NIIT Technologies (Rs 304.30): After a minor consolidation, the stock resumed its uptrend a few weeks ago. The short-term outlook is positive and the stock appears headed to the next resistance of Rs 338.
The stock may be bought with a stop-loss at Rs 285, for an initial target of Rs 338. A breakout past Rs 338 would help the stock coast along to the next resistance at Rs 360.
IDFC (Rs 138.95): Investors willing to wait for a little while may consider long positions in this stock. The short-term outlook is bullish and a rally to the next major target of Rs 170 appears underway. Those who have the patience may accumulate the stock with a stop-loss at Rs 125.
A move past Rs 170 could be a major sign of strength and could trigger a rally to the next resistance at Rs 185. Price weakness may be used to build exposures in IDFC.
(The views and recommendations featured in this column are based on a technical analysis of historical price action. There is a risk of loss in trading. The author may have positions and trading interest in the instruments featured in the column.)