By Ajit Mishra
Markets have been trying to cover the lost ground after the consolidation range breakdown but signals are still mixed. The key events like Union Budget and the US Fed meet turned out to favourable but a sharp sell-off in the Adani group counters faded the positivity and kept the participants on the edge. Meanwhile, buying in select sectors like FMCG, IT, banking, financials and auto-capped the downward bias and sell-off in metal, energy, pharma and realty offered opportunities to go short. The broader indices managed to end higher and gain in the range of 0.4% to 1.9%, thanks to the recovery in select midcap and smallcap stocks.
With all the major events behind us, the outcome of the upcoming RBI meet, earnings and further development on Adani group stocks will be in focus for cues. Meanwhile, indications are favourable from the global indices, especially the US markets. We feel traders should align their positions as per the sectoral trend and prefer sectors like IT and FMCG and be selective in auto, banking and financials for long trades. On the flip side, the underperformance from energy, pharma and realty may continue and traders should look for shorting opportunities on the rise.
Indications are mixed from the broader front so traders should limit their positions in midcap and smallcap space. Considering the prevailing uncertainty, we have highlighted key levels for Nifty and the banking index which traders should closely watch before planning their positional trade. Also, a list of stocks that are showing higher relative strength along with a few weak counters too.
Nifty, Bank Nifty Outlook
Nifty – Sustainability above 17,900 in Nifty would further subside the pressure and help the index to inch towards 18,200 levels. In case of a decline, 17,550 is critical to hold else the tone would again turn bearish.
Bank Nifty – It was the outperformance of the banking index which helped the benchmark to end in the green last week. However, it is still not out of woods completely and a decisive close above 41900 would be critical for the sustainability of the recent gains. In case of decline, the long-term moving average(200 EMA) which currently lies around 39800 may continue to act as a major support.
Stocks to Watch
Bullish – Apollo Tyre, Balkrisind, Bhartiartl, Britannia, FSL, Godrejcp, HCL Tech, M&M
Bearish – DLF, Divislab, JSW Steel, Jublfood, Reliance, Suntv
(Ajit Mishra, VP- Technical Research, Religare Broking. Views are author’s own. The views expressed are the author’s own. Please consult your financial advisor before investing)