Talking to ETNow, Kunal Bothra, independent market expert, says the market has sailed higher in the face of global negative cues, and this bullish streak may stay.
ET Now: This week, we have spent a large part of our time just circling around the 11,300 mark, with some intermittent dips also coming in. What are we in for next?
Kunal Bothra: It was that kind of a week for the indices, but there were no two ways to look at midcap stocks, because the market breadth remained positive for good part of this week. I sense that, with the market breadth now coming positive and midcap stocks making a comeback, largecap stocks have got that breather in terms of correction. I believe, it is going to be quite positive to take away.
This week Asian markets, as well as the emerging market cues were extremely negative. Despite those negative cues, our market has sailed higher. In technicals, we look at price action and respect what the price says. The prices indicate that we are into a bullish trajectory and this bullish momentum should continue for the indices going forward as well.
ET Now: The entire auto pack was active this week, especially because of the monthly auto sales numbers. There were concerns around Eicher. The fact that it is richly valued, what is going to happen to it once Harley Davidson comes into play? You saw this week that Eicher Motors got pounded for three consecutive trading sessions. Is it building up for a higher move or do you think the pressure on the stock would remain because of this report? It will report its numbers also next week.
Kunal Bothra: I believe that the pressure is now getting into the stock and it has made a negative candlestick pattern. Generally, when you expect bottom formation processes to happen, we expect the stock to remain sideways for good amount of time without any negative triggers, at least in terms of price patterns. But, what you saw this week, compared to the last week, price action is more of a bearish engulfing price pattern. The indicators on monthly charts for Eicher Motors have broken lows, which were almost closer to 2,009-2,010 when the stock was at 8,000-10,000 odd level. So, with indicator action breaking on the long-term charts and the weekly price patterns getting negative, I believe that the stock is building towards the downward trend or opening up a downward trend and you might see the stock correcting.
So, I am not sure how the stocks would react post results, but if the stock breaks this 27,000 mark support levels on weekly basis, you should see a bigger correction for the stock.
ET Now: Do we see Reliance Industries scale up fresher and fresher highs because the move has been steady after its AGM?
Kunal Bothra: Absolutely. I think from 2017, when the stock broke that 9-10-year of sideways range, it has not looked back anytime in the last one-and-a-half years. Yes, on the long-term patterns, the stock is getting into that high acceleration mode where you see higher price appreciations, that too on a short span of time. I think that should augur well for the stock. If you see volume built up happening, which is what the charts are now showing, it means there is increased amount of participation into the stock prices.
So, it indicates that this stock may not see that kind of volatility which could have been surfacing couple of months or quarters back and the stock is into a stable uptrend. I believe Reliance could continue to ride higher from current levels as well.
ET Now: Any interesting trades for Monday morning?
Kunal Bothra: Quite a few. I think one of them which I am suggesting to buy is Hindalco from the metal pack. I think it is making a good comeback over the last couple of days. Even though it has been sideways, but the price patterns have become positive for Hindalco so that is a buy, target of Rs 230 and a stop loss of Rs 204.
State Bank of India, I believe that the stock has now confirmed a strong weekly breakout at this 290 odd mark. It also crossed the 200-day moving average quite convincingly last week, so that is also a buy with a target price of Rs 320 and a stop loss of Rs 289.
The third stock is a midcap stock, Bombay Burmah. I think the stock is staging to a bullish flag pattern breakout. It is a liquid midcap name, would suggest a positional buy with the strong upside of at least Rs 1,700 to Rs 1720 zone, stop loss to be kept at Rs 1,555.