Nifty not bottomed out yet, extreme volatility on cards; buy ITC, M&M stocks, sell Axis Bank | INTERVIEW

NSE Nifty 50 has not bottomed out yet. In fact, the index has broken the crucial support level at 15700, which it has held for the last 3 months

NSE Nifty, Nifty 50, stock markets
The markets would trade with a negative bias till the outcome of the next meeting of the Federal Reserve.

NSE Nifty 50 has not bottomed out yet. In fact, the index has broken the crucial support level at 15700, which it has held for the last 3 months, Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said. In an interview with Surbhi Jain of FinancialExpress.com, Shrikant Chouhan said that if the 50-share index falls below 15000 levels, then it may plunge to 14500 on the downside. As the upcoming 3-4 weeks looks extremely volatile, Chouhan advised investors to invest in select companies in parts between 15100 and 14500 levels. He also listed a few top stocks to buy and sell this week, and noted the important levels to track this week on the Nifty. Here are the edited excerpts from the interview.

1.What are the top stocks to buy this week? What do charts say?

Few stocks are attractive to buy with a medium-term view. Fundamentally and technically, we prefer Mahindra & Mahindra (M&M) with a price target of Rs 1,040 stop loss at 980; ITC with a price target of Rs 280 stop loss at 258; and Apollo Hospitals with a price target of Rs 3,900 stop loss at Rs 3,640. All these stocks have completed corrective patterns at certain levels and the stop loss levels should be used to create long positions. For selling short, our advice is to sell Hero MotoCorp at Rs 2,490-2,500 and keep a stop loss at Rs 2,550, the target would be Rs 2,400 and Rs 2,350. Sell Axis Bank between Rs 640 and Rs 650. Keep a stop loss at Rs 655.  On the downside, the support would be at Rs 610 and Rs 600. Selling ideas are based on the dismissal of the major support levels.

2. Do you think the Nifty 50 index has made a bottom at current levels? Are there any signs on the chart?

NSE Nifty 50 has not bottomed out yet. In fact, the Nifty 50 index has broken the crucial support level at 15700, which it has held for the last 3 months.

3. Amid current market scenario, has the selling pressure abated now or is there more downside?

The markets would trade with a negative bias till the outcome of the next meeting of the Federal Reserve.  

4. What are the key triggers and drivers for stock markets going ahead?

Key triggers would be how the US and other developed countries fight inflation. It will decide the flows for the emerging markets and also it would keep the Indian currency under the depreciating mode. We also need to see how crude prices move from the current levels.  If they keep going upward then it would cause further problems to emerging markets. In case the crude prices come off from the highs then the chances of revival in the market would turn bright.

5. Which are the important levels to track this week on the Nifty?

Technically, the market has shifted trading on the down side and it might trade between the range of 15000 and 15700 levels. On the dismissal of 15000, the Nifty would gradually fall to 14500. On the higher side, 15700 and 16000 would be major hurdles.

6. Top three-five trading strategies for the next three-four weeks?

Three to four weeks looks extremely volatile. We need to be level based traders in the market. The strategy should be to trade long between 15100-15000 with a short term view. Keep a stop loss at 14950. On the other side, traders can create short positions between 15600 and 15700. For that traders need to keep a stop loss at 15800.

7. What should investors follow – buy on a dip or sell on rally strategy?

For investors, our advice is to invest in select companies in parts between 15100 to 14500 levels. It is advisable to reduce weak investments or to consolidate between 15600 and 16000  levels.

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