By Ajit Mishra
It has been more than three months now that Nifty has been gradually drifting lower after making a new record high in December 2022. And, the previous month was almost a roller coaster ride as Nifty rebounded from the low of 17,353.40 to 18,134.75 level in the first half. However, it couldn’t hold the gains as the tone changed completely in the latter half and it finally settled at 17,303.95 levels. Factors like mixed global cues and lack of participation from the index majors during the recovery phase are keeping the participants on the edge.
In the absence of any major event, the performance of the global markets, especially the US, will continue to dictate the market trend. The resilience in the banking and financial majors is helping the index to cap the damage. However, we feel participation from the other sectors like IT, auto and energy is equally important to strengthen the recovery.
Amid mixed signals, participants should focus on key support levels to play the rebound and resistances to book profits & initiate short trades in both Nifty and the banking index. And, since we’re still seeing selective participation, we have highlighted a list of stocks that one can look at for trading opportunities.
Nifty (CMP: 17,711.45)
Nifty has recently surpassed the hurdle of long term moving average i.e. 200 EMA on the daily chart and now sustainability would be critical to help the index inch towards the 18,000-18,200 zone. In the case of further decline, the 17,400-17,600 zone would continue to act as a cushion.
Bank Nifty (CMP: 41,350.40)
The banking index has also rebounded after retesting the major support zone of the long term moving average i.e. 200 EMA of late and reached closer to the previous swing high i.e. 41,979 levels, which also coincides with the resistance of a declining trend line. It could see some consolidation around the current level before the next leg of up move. On the downside, any dip toward the 40,600-40,900 zone can be considered a buying opportunity. We reiterate our preference for private banking names and recommend staying selective in the PSU space.
Stocks to Watch
Bullish: Axis Bank, Balramchin, Bergepaint, Canbk, Coforge, Coromandel, FSL, Havells, Powergrid, TVS Motor
Bearish: Bandhan Bank
(Ajit Mishra, VP- Technical Research, Religare Broking. Views expressed are author’s own. Please consult your financial advisor before investing.)