Buoyancy in NiftyBank index could push Nifty50 to test new high in coming week

November 18
00:02 2019

Buoyancy in the banking index is pointing towards a strong possibility of the Nifty50 testing a new high in weeks to come, Ajit Mishra, Vice President, Religare Broking, said in an interview with Moneycontrol’s Kshitij Anand.

Q) The market eked out gains from a volatile week. Do you think that with this momentum, we should be able to reclaim 12,000 in the November series and possibly hit a record high before December-end?

A) The markets ended almost unchanged amid volatility in continuation of the prevailing consolidation phase that we are seeing.

The mixed trend was witnessed on the sectoral front as well where banking helped the benchmark index to hold at the higher levels, while others traded mixed.

Indications are in the favour of a further consolidation, and we expect the Nifty50 to hover within 11,700-12,100 range in the coming week.

Having said that, we feel it is a healthy pause after the recent surge and the overall trend would remain positive. Besides, the buoyancy in the banking index is pointing towards a strong possibility of the Nifty50 testing a new high in the weeks to come.

Q) A mixed trend was seen in the broader market space. Smallcap index fell for the week ended on November 15, while Midcap saw mild gains. Do you think the pressure is likely to continue?

A) After a marginal bounce, We are seeing a lull phase once again on the broader front. It shows indecisiveness among the participants amid weak local cues. They are avoiding high beta counters and sticking mostly with the index majors.

However, we are seeing selective recovery and expect this trend to continue, at least in the near future. Participants should maintain extra caution while making fresh bets and suggest to strictly avoiding penny stocks.

Q) Telecom stocks have come back in focus. What should be the investment strategy?

A) Pure play telecom stocks have seen a rough ride ever since the launch of Jio that has considerably increased the intensity of the competition. The price wars have led to a decline in profitability for the incumbent players.

Further, the recent judgment by the Supreme Court that telecom companies would have to pay Rs. 92,000 crore to the government only added to the pain to these companies.

Nonetheless, there have been news reports suggesting that the government is looking for a floor price for call and data rates. This news is positive, if implemented. However, given the fierce competitive intensity in the sector, it would be prudent to stay away from it.

Q) Any top 3-4 stocks which are looking top value buys based on technicals, and why, given the current levels?

A) Here is a list of top three stocks which we think are good buy options at current levels:

Tata Chemicals Limited: Buy| LTP: Rs 639| Target: Rs 670| Stop loss: Rs 624| Upside 5 percent | Initiation range: Rs 635-640

Tata Chemicals has been gradually inching higher for the last two months, after forming a strong base at 200-EMA on the weekly charts.

It has witnessed a marginal dip of late and tested the support zone around 620 levels, which has resulted in the formation of a fresh buying pivot. We advise initiating fresh longs as per the mentioned zone.

HDFC Ltd: Buy| CMP: Rs 2,224| Target: Rs 2280| Stop Loss: Rs 2,180| Upside 2 percent | Initiation range: Rs 2,210-2,215

After a rally from Rs 1,950 to Rs 2,264 levels, HDFC Ltd has retraced marginally of late and tested the immediate support zone around Rs 2,200 levels.

Considering its overall trend and buoyancy in the banking and financials space, we advise using this dip to create fresh longs in the given range.

Power Finance Corporation Ltd: Buy| LTP: Rs 111.20| Target: Rs 118| Stop Loss: Rs 107| Upside 6 percent | Initiation range: Rs 110-112

PFC has been consolidating in a narrow range of Rs 108-114 for the last two weeks while holding strongly above the support zone of moving averages ribbon i.e. (50/100/200 EMA) on the daily chart.

Indications are now in the favor of the fresh up move in the near future. Trades can initiate fresh longs as per the given levels.

Q) Any big market-moving data to watch out in the coming week?

There is no major data lined up on the domestic front in the following week and markets will continue to dance on the global tunes.

On the global front, investors would keep an eye on the progress of the US-China trade deal, which is lingering from quite some time and minutes of the FOMC meeting on November 21. Also, the fluctuation in crude oil prices and currency would induce some volatility in the markets.

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