Yes. There are two sides of the equation. On one side, we have the US markets, especially Dow Jones, which has broken out from a structural consolidation of the last six odd months and seems ready to be heading for a new lifetime high.
On the other side, we have our indices, which have done fairly well. We have seen a rally from 17,000 odd without a meaningful correction. Where does this go? One is the institutional positioning. FIIs are still long on the markets. They continue to be bullish on the index futures. Retail is still a bit stuck with short positions. My sense is that we are some distance away before the markets top out or show any kinds of reversal.
In fact, the last few days of consolidation has only strengthened the current structure, which means that on an immediate basis, we may be headed for a new all-time high. 20,200 is where the projections for the current consolidation setup take us to. But structurally speaking, the move has not matured yet.
The Bank Nifty, which sort of has been the leader in the previous leg of the rally, has taken a bit of a backseat. But again, the structure is pretty robust. We move up for a few days, consolidate for about a week or so and then the follow-up leg of the rally happens. As far as Bank Nifty is concerned, 47,000, 47,500 is very much on the cards. As for the August series, we could just continue with the current momentum that we are in. Yes, it could not be a straight line. There would be timely corrections.
But given the current consolidation, the probability of us finally having a mini-breakout from this consolidation is pretty high. Both Nifty and Bank Nifty look upbeat. 20,200 on the Nifty on an immediate basis and around 47,000 on the Bank Nifty is very much a possibility in the next few trading sessions of the August series.
I also want some stock-specific recommendations and your opinion on the M&M counter, which is taking a bit of a drubbing today. Colgate is also doing rather well as also Cipla. Which is the stock that you would look to buy?
Pharma has been doing extremely well. The risk reward is not really favourable at this point in time. Auto on the contrary, is at an index level. Technically, the levels are still not extremely overbought. M&M is available close to its 50-day moving average support in a market which has done extremely well. I think that would be a bargain buy.
So in terms of levels, Rs 1,400, 1,430 is a very strong support for the M&M stock. I would be a contrarian here and look to accumulate in this volatility in this range. I have a stop loss placed below Rs 1,400, maybe at Rs 1,380. A rebound could very well take us back to around Rs 1,520, 1,540 on the upside. I would be a contrarian in M&M and look to accumulate in this volatility.What about the other stock-specific recommendations that you are spotting in the market?
There is a very big breakout in Grasim. About 21 months of consolidation finally, cement stocks are seeing a bit of attraction this week. Grasim particularly has broken out around the 1,800 mark. In the very short term, we could see the stock heading towards the Rs 2,000 timeframe. But even if you are slightly medium to long term kind of an investor, you could expect higher levels in this. Rs 2,200, 2,500 are the projected targets for the next 12 months. So both short term and long term, Grasim looks pretty solid.
We are also approaching the monthly closing on Monday and this breakout could play out very well. We can have a stop loss placed at Rs 1,667 for the bigger target. As far as the trading target is concerned, Rs 1,730 is a very strong support for the stock. Have a stop loss placed for traders around that level. And 2,000, 2,050 is a short term target in the same.
The second idea is on the metal space. Metals continue to impress on the upside. We have seen follow up buying happening after we saw a breakout in the metal index. Now Tata Steel looks good for Rs 125, 140 on the upside. This stock could continue to do well in the August series as well, a very robust technical setup. A slight bit of resistance is there at Rs 125 but looking at the way most of the metal pack is placed, this level will also be taken out. So go long in Tata Steel. Have a stop loss at Rs 114 odd. Metals could continue to do well on the upside as well.