By Ajit Mishra
Markets managed to end flat in March, after seeing correction for three successive months. Though the tone was negative for most of the month but rebound in global markets combined with bargain hunting in select index majors in the final week aided recovery. On the benchmark front, Nifty rebounded after testing 16,900 and finally settled at the 17,359.70 level. However, the pressure continued on the broader front and both midcap and smallcap index ended lower for the fourth successive month.
With improvement in the global scenario, we expect the rebound to extend further however we have multiple hurdles to cross for a trend reversal. Besides, participation is still skewed to select index heavyweights and we’re seeing a similar situation on the broader front as well. Going ahead, we expect volatility to inch higher, with the beginning of the earnings season. Amid all, it’s prudent to focus on sectors like banking and FMCG and stay selective in others.
Until we see the trend reversal, we recommend aligning positions as per key levels highlighted here for both Nifty and the banking index. Also, traders can consider stocks from the given list of counters for planning their positional trades.
Nifty (CMP: 17,398.05)
We’re now eyeing 17,600 in Nifty, after the consolidation breakout from the 16,800-17,200 zone. And, a decisive close above 17,700 could prompt a reversal in the trend as well. On the downside, the earlier resistance zone i.e. 17,200 should act as immediate support and major support at 16,800.
Bank Nifty (CMP: 40,813.05)
The banking index has again played a crucial role in recovery and indications are favourable for the prevailing tone to continue. Technically, it looks comparatively stronger than Nifty and has the potential to test the 41200-41400 zone. In case of any profit-taking, the support zone of the long-term moving average i.e. 200 EMA, which is currently hovering around 40,000 would act as a major cushion. Amid all, we reiterate our preference for private banking majors and suggest staying selective in others.
Stocks to Watch
Bullish – Abcapital, Apollotyre, Bajaj-auto, Balramchin, Bankbaroda, NTPC, Petronet, Titan
Bearish –Apollohosp, Aubank, IRCTC, Jublfood, Lupin
(Ajit Mishra is VP- Technical Research at Religare Broking Ltd. Views expressed are author’s own.)