Bank NIFTY is on the verge of breaking out

How will be the coming week? Well, the NIFTY has found some support near 8080-8100 zone. It can move either way. The crucial factor is Bank Nifty. If the bank nifty goes up, Nifty may touch 8200 by expiry. And bank nifty is showing some positive sign. After days of consolidation, it has broken out towards the end of last week. We believe that in the coming few sessions, Bank Nifty will outperform. In the initial stage, PSU banks will be the major contributor. Our favourite choice in the lot is Bank of Baroda. It has made good upward movement towards the end of last week and has all the potential to touch 1100 before expiry.

Adani Ports is another stock, which we are tracking very closely. In the last few days, we have been that it traded between 290 and 300. Number of attempts to cross the Rs 300 mark has failed. If it can break out the resistance and surpass (by closing price) 305 mark, then we can see substantial upward journey from there.

United Spirit may make a long jump in the next few trading session. We have seen bounce back from lower level in this counter. ICICIDirect published a research report on last Friday, stating the target price of Rs 2950.

ITC and Sun Pharma are the two stocks that we will closely track next week. The USFDA audit in the last two trading session caused this counter to shade more than Rs 50. The outcome of the audit will decide the fate of this stock. ITC has bounced back from the level of 351.2 to 357.95 (intraday). If ITC can sustain at the high level, NIFTY will get some support from this counter.

In the last week, the IT index has shaded 0.6% and underperformed the market. This week also, IT is expected to have a mute performance. The observation is that IT and Bank Nifty rarely perform well together. Since Bank Nifty is expected to outperform the market, the IT sector may perform in line with the market or underperform.

PSU Banks back to focus

PSU Banks are again back to focus. In today's trade, barring few PSU banks, most of the PSU banks ended in green, in spite of the fact bank nifty ended in red. The most notable was Punjab and Sind Bank, which has increased by 9%. The other PSU banks like Andhra Bank, Canara Bank, Central Bank, Dena Bank, Indian Overseas Bank, all increased by over 2%. Bank of India, Indian Bank, Orient Bank, SBI, Uco Bank and Union Bank were among the looser.

On the other hand, majority of the private banks lost the ground today. ICICI bank is a notable gainer, which provided some support to the index. Yesterday, ICICI bank declared a stock split of 1:5. Other than ICICI bank, Dhanlaxmi Bank and City Union bank have also gained substantially. J&K Bank was the biggest looser, which declined by 4.38%.

Providing NIFTY is stable tomorrow, PSU banks should make further gain.

Sun TV Network - Expected to bounce back

Sun TV network is currently hovering around Rs 351 level (up 0.41%). It has come down from the level of around Rs 460. It has found good support around Rs 350. The down-trend was caused by dismal Q1 performance and its promoter Kalanithi Maran, who was charge-sheeted by CBI. However, it seems that it has already factored in the bad news and further downside is limited.

Sun TV network has good potential to move above Rs 450 level in the next 12 months. In the recent past, most of the brokerage firms set target price of Sun TV network above Rs 400 level. This is mainly owing to the good advertising growth because of better economy. It is also expected to have good revenue growth from digitization roll out for the rest of the cities in India. Below is the summary of target price of Sun TV network, set by different brokerage firms

Sharekhan - Rs 425 - Report date 26-Aug-14
Emkay - Rs 461 - Report Date 19-Aug-2014
Kotak Securities - Rs 470 - Report Date 11-Aug-2014
ICICI Direct - Rs 445 - Report Date 09-Aug-2014
Religare Capital - Rs 475 - Report Date 09-Aug-2014
Prabhudas Liladhar - Rs 510 - Report Date 20-Jun-2014
Firstcall Research - Rs 473 - Report Date 06-Jun-2014

For the short term investor as well, the Sun TV network stock is expected to bounce back soon. It is nearing high sold region and hovering around lower bollinger band level of Rs 343.90. Today it has seen spurt in open interest, which has increased by 13%. It has also observed high volume with high delivery based buying (delivery 82.3%). Thus in the next few trading session, we are expecting the stock to touch Rs 363.

Risk : The case revolving around Kalanithi Maran is yet to be closed and hence it is an overhang on the stock Sun TV network.

United Spirit - A Buy call below Rs 2300

United Spirit can be bought for a short term target purely from technical angle. It is currently hovering around its 52 weeks low of 2226. The stock has come down from the level above 2800 in the last three months. At the current level, the stock is nearing oversold region and having a 14 days RSI of 29.28. The stock price is also near its lower bollinger-band level of 2255.

There was a block deal on 09-Sep-14 for deal price Rs 2262, total transaction amount being Rs 13.23 crore.

The stock is expected to touch Rs 2310 and if it can sustain at this level, it may also touch the level of 2362.

However, it needs to be kept in mind that there are some corporate actions expected and it may affect the stock price. Traders are advised to keep strict stoploss at Rs 2268