By Ajit Mishra
Markets have been witnessing healthy correction after making a new record high. And, it’s trading largely in line with the global markets, especially the US, which we closely follow. However, the pace of decline is gradually in our markets, thanks to resilience in the banking pack and rotational buying in select index majors from other sectors as well. Besides, the recent improvement in the participation of the broader markets has further eased the pressure.
Going ahead, global cues will dictate the market trend, in absence of any major event on the domestic front. We recommend focusing on stock-specific trading opportunities based on sectoral trends. Banking and FMCG look promising to us while pharma and IT may continue to trade lackluster. Besides, traders should keep leveraged positions hedged, especially overnight trades, citing the upcoming event i.e. US Fed meet and staying selective on the broader front. Traders should be watchful of critical levels in Nifty and the banking index before planning their trades. Also, we’ve highlighted a few names from the derivatives basket which should be on traders’ Radar.
Nifty (CMP:18,497.15) – After making a new record high at 18,887.60 on December 01, Nifty has slipped gradually to the first line of defence i.e. 20 EMA and currently trading at 18,497.15 levels. We’re eyeing 18,300 as critical support and its break could result in a further decline toward 18,000 levels. On the other hand, to regain strength and inch towards the new milestone of 19,000, it should decisively reclaim the 18,750.
Bank Nifty (CMP:43,708.75) – The banking index has been outperforming the benchmark and showing tremendous resilience in the recent correction so far and we expect this tone to continue. It has the potential to test the 44,250 level and then 44,800 so traders should continue with the “buy on dips” approach till 42,900 is intact. We reiterate our preference for private banking majors as PSU banking counters may witness some consolidation after the recent surge.
Stocks to Watch – Within the F&O basket, traders may consider stocks like Axis Bank, BPCL, Colgate Palmolive, HDFC Bank, and Hindustan Unilever for long trades. Among the weak structures, pharma names like Biocon, Lauruslab and Dixon, Jubilant Foods are some of the stocks which may continue to attract selling pressure on every rise.
(Ajit Mishra, VP- Technical Research, Religare Broking. Views are author’s own.)