Nifty turns schizophrenic: buy-sell signals are mixed
Sensex opens in green; Mphasis up 5% on US firm acquisition

Data Dec 1, 2012

Beyond Nifty heavies, the big gains may be in mid-caps

Special to Firstpost

S&P CNX Nifty (5879.85): After an extended stretch of consolidation, the Nifty finally managed to pop out of the trading range that it was confined to. The pick-up in the index was a striking feature of the rally. Also, the rally was all pervasive with large as well as mid-cap stocks participating in the move up.

With a breakout past 5,690, the short-term trend has turned bullish and the rally towards the target of 6,000 appears underway. The recent swing low of 5,548 would now act as a reference point for the bullish camp. The short-term trend remains bullish as long as this low of 5,548 is intact. (See chart here)

After an extended stretch of consolidation, the Nifty finally managed to pop out of the trading range that it was confined to. Reuters

Short-term traders may use any minor pull-back to 5,750-5,790 to initiate long positions in the Nifty. Those entertaining the thought of having missed-the-bus may take exposures via the options route.

Amongst the index heavyweights, the likes of State Bank of India, Larsen & Toubro, IDFC and Infosys come across as top picks. But, mid- and small-cap stocks come across as a more compelling option from a short-term trading perspective. Sintex, Dabur, Eros International. Balkrishna Industries, Jet Airways and Apollo Tyres come to mind readily from this space.

CNX Bank Index (12,158.90): The sharp rally in this index was instrumental in propelling the Nifty to higher levels. The breakout past the bullish trigger level of 11,720 is a sign of strength. A look at the Point & Figure chart indicates that the index could now rally to the next target of 12,700.

The short-term bullish view for the bank index is supported by the positive undertone in stocks such as State Bank of India, Bank of India, Union Bank and Axis Bank. The bank index has to fall below the recent swing low of 11,125 to indicate a reversal of the short-term bullish trend.

Apollo Tyres (Rs.84.45): This stock was in a downward correction off the 13 September high of Rs 102.45. The recent price action suggests that this correction is over and the next leg of the rally appears underway.

The short-term outlook is bullish and the stock could test the immediate resistance at Rs 93. Long positions may be considered with a stop-loss at Rs 79, for an initial target at Rs 93. Those willing to hold for a longer time period may get exit opportunities at Rs 103.

Sintex Industries (Rs 63.70): The progression of higher highs and higher lows, since the 18 May low of Rs 50.20, is a sign that the stock is in an uptrend. The technical indicators suggest that the stock has embarked on the next segment of the upward journey. (See chart here)

Investors may buy the stock with a stop-loss at Rs 58, for an initial target of Rs 72. Patient investors may wait for higher target of Rs 78 to take profits. A trailing stop-loss may be used if the stock sails comfortably past the major resistance-cum-target of Rs 78.

(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.)

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