By Ajit Mishra
The last three weeks of the rebound have brought in much-needed relief to the participants, after four months of the corrective phase. Among the key factors, stability in the global markets especially the US has played a critical role in recovery. Besides, bargain hunting in heavyweights from banking, financials, auto and FMCG pack also added to the bullish sentiment. Consequently, Nifty tested 17,828 of late, after making a low at 16,828.35 level. In line with the benchmark, the recovery in broader indices has further eased the pressure.
With stability on the global front, the focus will be now on earnings for cues. The pressure is quite visible in IT majors however buoyancy in other key sectors may continue to help the index to extend the prevailing surge. Besides, we have seen a noticeable improvement in participation among the Nifty 50 stocks. On the sectoral front, we reiterate our preference for banking, financials, FMCG and auto and suggest picking selectively from others.
Amid all the positivity, we could see some consolidation in the index first, after the recent surge thus it is important to plan the trades, keeping in mind the key support and resistance zone. Besides, since we’re still seeing selective participation, we have highlighted a few stocks, which are looking comparatively stronger on charts and have the potential to do well in the coming weeks.
Nifty (CMP: 17,706.85)
It has finally witnessed a trend reversal from a declining channel on the daily chart and we are eyeing 18,100+ now. It is currently trading closer to the midpoint of the entire fall i.e. 16,828-18,887.60 so we could be some intermediate consolidation first however the tone is likely to remain positive. In case of any dip, the 17,400-17,600 zone would act as strong support.
Bank Nifty (CMP: 42,262.55)
The recovery has been swift in the banking index and we expect the prevailing tone to continue. We are eyeing the 43000+ zone while the 41200-41600 zone would provide the needed support in case of any profit taking. Considering the prevailing chart structure, we reiterate our preference for private banking majors and suggest staying selective in the PSU pack.
Stocks to Watch
Bullish: Aditya Birla Capital, Bank of Baroda, DLF, Federal Bank, GAIL, Petronet, Power Grid, TVS Motor
Bearish: Jubilant FoodWorks, Lupin, Sun TV, ZEEL
(Ajit Mishra, VP- Technical Research, Religare Broking. Views expressed are author’s own. Please consult your financial advisor before investing.)
