By Ajit Mishra
Markets have been inching higher, after reclaiming the record high after seven months. The recent leg was almost vertical, thanks to rotational participation across sectors and supportive global markets. The highlight was the alignment of the banking index, which had been underperforming for the last several weeks. Besides, the broader indices too maintained their positive tone and continue to edge higher.
Apart from the domestic factors, the recovery in the US markets also played an important role but we are again seeing profit taking at the higher levels. Going ahead, it would be critical to hold the 33,300-33,600 zone in Dow Jones Industrial Average (DJIA) to maintain the uptrend.
Markets may see some consolidation after the recent surge and the beginning of the earnings season may further add to the volatility. Amid all, we believe the bullish bias is not going to fade anytime soon however participants shouldn’t get carried away and maintain their focus on stock selection and position management. Traders should keep a close eye on the key levels in Nifty and the banking index while making adjustments to their positions. Based on the technical charts, we also identified a list of stocks that have the potential to do well along with some weak structures.
Nifty (CMP: 19,355.90)
The recent up move in Nifty was almost vertical as it surged from 18,600-19,500 in no time so it is prudent for the index to spend some time around the current levels before marching further northwards. We expect Nifty to respect the 18,700-19,000 zone in case of any dip while the 19,500-19,700 zone may act as a hurdle.
Bank Nifty (CMP: 44,860.85)
The banking index is taking a breather, after the failed attempt to surpass the trendline hurdle on the weekly chart. It is likely to consolidate in line with the benchmark however a mixed trend within private banking majors may keep the traders on their toes. We thus recommend limiting aggressive longs and waiting for the resumption of the trend.
Stocks to Watch
Bullish – Bharat Forge, Bharti Airtel, BHEL, Canara Bank, Colgate-Palmolive (India), GAIL, Sun Pharma
Bearish – IEX, Jubilant FoodWorks, Siemens, UPL, Voltas
(Ajit Mishra is SVP – Technical Research, Religare Broking Ltd. Views expressed are the author’s own. Please consult your financial advisor before investing.)