By Ajit Mishra
Bears remained under control in May expiry and pushed the markets further lower. Global headwinds like fear of aggressive rate hikes from the US Fed, the ongoing Russia-Ukraine War, and Covid-led lockdown in China continue to dent the sentiment. On the domestic front, the earnings season turned out to be mixed, in absence of any major positive surprise. However, intermediate buying in select index majors capped the damage till the end.
We’re closely following the global markets, especially the US, for cues and mostly are still reeling under pressure. We see some intermediate consolidation/rebound due to oversold positions however there’s no sign of trend reversal yet. With the earnings season in the last leg, we try to figure out where the NSE Nifty 50 and Nifty Bank are heading in June month and some of the stocks which have the potential to do well amid volatility.
It plunged sharply lower after the consolidation breakdown from the 16800-17400 range and reached closer to the March low i.e. 15,670 in no time. It has been consolidating in a broader range i.e. 15,800-16,400 for the last 2 weeks and trading closer to the upper band of the same.
We thus recommend waiting for either side’s decisive break for the next directional swing. In case of a breakout, the 16,700-16,900 zone, which was earlier acting as support, would act as a strong hurdle. On the downside, 15,400 levels hold critical support after 15,800.
The banking index initially traded in line with the Nifty and declined sharply. However, the situation improved with recovery in the select banking majors in the final weeks. It looks comparatively stronger than Nifty at present however a decisive breakout above 36,000 is needed to maintain this bias. On the flip side, the tone would reverse below the 33,500 mark. Amid all this, participants should selectively look for buying opportunities in the private banking space and prefer PSUs for shorting as and when the opportunity arises.
Stocks to watch in June expiry series
Stocks like Ambuja Cements, Apollo Tyres, Bajaj Auto, Britannia Industries, Colgate Palmolive, Eicher Motors and Jubilant FoodWorks, Kotak Mahindra Bank, Mahindra & Mahindra (M&M), Marico and TVS Motor are strongly placed on charts and are likely to perform well in June series.
(Ajit Mishra, VP – Research, Religare Broking. Views expressed are the author’s own.)