By Ajit Mishra
April month turned out to be a favourable one for participants, after four months of dismissal performance. The benchmark indices gained over 4% and settled closer to the month’s high as well. Continuous buying in banking, financials, auto, realty and FMCG majors kept the tone positive for most of the month however pressure in the IT majors capped the momentum in between. Amid all, Nifty managed to reclaim the 18,000 mark and Sensex also crossed 61,000 levels. In line with the move, the broader indices too witnessed strong traction and gained in the range of 6%-8%, offering much-needed respite to the investors.
Besides the earnings season, the outcome of the US Fed meet will keep the volatility high in the near future. Indications are in favor of prevailing recovery to continue, with some intermediate consolidation. Among the key indices, banking, auto and FMCG have been showing consistency in performance and we are now seeing improvement in the energy and IT pack too.
Keeping in mind the market tone, we have highlighted the key levels for both Nifty and the banking index. Traders should utilise dips toward the key support zone to accumulate quality stocks. With improvement in the broader markets, traders can selectively look at midcap and smallcap stocks also. We have highlighted a few stocks across the market capitalisation that look strong on charts.
Nifty (CMP: 18,065.00)
We expect the positive tone to continue however Nifty may take a breather around the 18,100-18,200 zone first before inching towards the 18,350. In case of any dip, 17,850 would offer the needed cushion.
Bank Nifty (CMP: 43,233.90)
The banking index has been leading the recovery phase and inching closer to its record high now. Though the positive tone would continue, it may lose some momentum now and face resistance around the 43,500 level first. In case of any profit taking, the 42,000-42,600 zone would act as a support. We reiterate our preference for the private banking majors and suggest choosing selectively from the PSU space.
Stocks to Watch
Bullish: AB Capital, Bharti Airtel, Canara Bank, DLF, Dr Reddy, Eichermotor, Exide Industries, HAL, IEX, LT, REC Limited
Bearish: MCX, PVR, Tata Chemicals
(Ajit Mishra, VP – Technical Research, Religare Broking. Views expressed are author’s own. Please consult your financial advisor before investing.)