Nifty near record high: PSU banks steal the show

Special to Firstpost

CNX Nifty (6,144.90): It was quite an eventful week for the stock markets. While the Sensex hit a new record high on Friday, the Nifty is within the striking distance of its life-time high of 6,358. As observed last week, the index sought support at 6,040-6,060 range and staged a sharp comeback.

The recovery has pushed the index past the upper end of the range at 6,250. Technically, the outlook for the Nifty is bullish.As long as the bullish sequence of higher highs and higher lows is intact, there is no reason to doubt the uptrend or its longevity. The short-term uptrend would be under threat only if the Nifty falls below the recent swing low of 5,700.

Those holding long positions in the Nifty may snug their stop loss below the recent minor swing low of 6,079. Until the index falls below 5,700, there would be a strong case for a rally to 6,450-6,500. Intermittent price weakness may be used to buy quality large cap stocks.

CNX Bank Index (11,628.65): As observed last week, this index played a key role in propelling the Nifty to higher levels. While the banking sector as a whole performed well this week, it was the stocks from the public sector banking space that stole the show.

The Bank Index has seen a smooth progression of higher tops and higher bottoms, which is a sign of strength. The prior swing high at 11,220 has been overhauled and the index now appears on track to reach the next target of 11,950-12,000. A breakout past 12,000 could pave the way for a rise to 13,000.

The uptrend and the bullish view would be under threat only if the index falls below the latest swing low of 10,274. Investors may accumulate high quality banking stocks on downward corrections.

Raymond (Rs.273.60): The persistent downtrend since Dec.11, 2012 was arrested at Aug. 28 low of Rs.175.50. The subsequent price action indicates that the stock is in a short-term uptrend and a rally to the immediate resistance at Rs.310-315 appears likely.

Investors may accumulate this stock with a stop loss at Rs.256 for a target of Rs 315. a move beyond Rs 315 would lend further momentum to the uptrend and the stock could then test the major resistance at Rs 335-340.

Zee Entertainment (Rs.270.60): The stock has been in an uptrend since August 28 low of Rs 208. The short-term outlook is bullish and a rally to the immediate resistance at Rs 295-300 appears likely.

Long position may be considered in Zee Entertainment, with a stop loss at Rs.257 and target of Rs 300. Those willing to play the waiting game may wait for exit opportunities at or beyond the major resistance at Rs 330.

(The views and recommendations featured in this column are based on the 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.)