In case the support of 14400 is taken out then the index could slide towards 14,200 – 14,000 which is the lower end of the falling channel in which the index has been trading for quite some time, says Mehul Kothari, AVP – Technical Research at AnandRathi.
Mehul Kothari, AVP – Technical Research at AnandRathi
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If we go to the hourly charts we can see a positive crossover of 50-SMA with 200-SMA which is a bullish sign, thus unless 14,400 is not breached we are still hopeful for the upside, Mehul Kothari, AVP – Technical Research at AnandRathi said in an interview with Moneycontrol’s Kshitij Anand.
Q) Bears took control of D-Street despite Govt giving assurance of 2bn jabs. What led to the price action on D-Street in the week gone by?
A) Although truncated but the week remained a bit volatile for the domestic markets. On May 10, the Nifty index attempted to cross 15,000-mark but failed to do so.
This was later on followed with some pressure in our markets. The primary reason could be the softness in the global markets. The US markets including other Asian markets underwent decent correction during the week.
As a result, our markets too followed them. On the other hand, a slowdown in the vaccination program for India too dented the sentiments.
Q) Small & Midcaps have remained resilient in the fall seen in the week gone by. What is fuelling the optimism in the broader market space?
A) We have been constantly echoing our bullish view on the broader markets. We reiterate that in any bull run when the benchmark goes into some consolidation; it’s the midcap and smallcap which outperforms and this is what is happening. They might continue with their upside in the coming weeks too.
Q) What are the important levels to watch out for? And, what should be the strategy as Nifty closes below 50-Days SMA for the week ended May 14?
A) Indeed the index Nifty50 is juggling with the placement of 50-SMA on a daily scale. However, if we go to the hourly charts we can see a positive crossover of 50-SMA with 200-SMA which is a bullish sign.
Thus unless 14,400 is not breached we are still hopeful for the upside. In case the support of 14,400 is taken out then the index could slide towards 14,200 – 14,000 which is the lower end of the falling channel in which the index has been trading for quite some time.
On the upside, 15,000 is a sturdy hurdle. A close above the same would strengthen the markets for a new high.
Q) Sectorally, Utilities index was one of the top sectoral gainers. What led to the price action in that sector?
A) Recently, the Utility index confirmed a major breakout above its 2018 peak of 2,331 and the rally we saw in them was just an after effect of the same.
Many stocks PFC, NTPC, GAIL, etc. in the index were technically looking lucrative with regards to risk-reward ratio. However even they were not spared on Friday as the index closed with a cut of over 2%.
Q) IT index was the top sector loser down over a percent. Can it be attributed to profit-booking?
A) Off course it seems to be profit booking in the IT stocks. As a part of sector rotation, we witnessed buying interest in FMCG while the NIFTY IT was under pressure.
Apart from profit-booking; strength in INR from the zone of 75.50 towards 73.50 could have added some skepticism to them.
Q) FIIs remain net sellers in Indian markets. What is spooking foreign investors – is it domestic or global factors?
A) If we talk about India then FIIs must have gained decently in the past few quarters and due to global uncertainty over the pandemic, they opted to book profits.
I would assume it is both domestic and global factors and in both; the major worry remains ambiguity of COVID-19.
In the month of April 2021, they remained sellers to the tune of around 15000 crores worth equities and so far in this month, they sold over 3000 crores of equities.
Q) Please suggest three-five trading ideas for the next three-four weeks?
A) Here is a list of our technical recommendations –
Indiabulls Real Estate: Buy | LTP: Rs 81 | Stop Loss: Rs 75 | Target: Rs 92 | Upside: 13 percent
Indiabulls Real Estate has been consolidating in a tight range of 84 – 75 for the past month. During this period, the stock found support at the placement of 200-Days EMA.
This support coincides with the flat line of Ichimoku on the weekly scale as well. The stable price action above such strong support indicates accumulation and the stock is preparing for a fresh upside.
Hence, traders are advised to buy the stock near 81 with a stop loss of 75 for the upside potential target of 92 in the next three–four weeks.
RIL: Buy | LTP: Rs 1,936 | Stop Loss: Rs 1,875 | Target: Rs 2,040 | Upside: 5 percent
Since the month of November 2020, the RIL has made almost three bottoms between 1,830 – 1,860 levels. This indicates multiple support for the stock near 1,830 mark.
Even in the recent corrective move, the stock made a low of 1,876 and then rallied towards 2,050 level. At this point in time, it seems that the stock is turning from those supports.
Traders are advised to buy the stock in the range of 1,940 – 1,920 with a stop loss of 1,875 for the upside potential target of 2040 in the next three–four weeks.
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Ramkrishna Forging: Buy | LTP: Rs 648 | Stop Loss: Rs 575 | Target: Rs 770 | Upside: 18 percent
Ramkrishna Forging has been consolidating in a broad range of 610 – 490 since Jan 2021. Recently, the stock has broken out from the five-month consolidation pattern which indicates strength.
On the larger degree scale, the breakout resembles a bullish FLAG pattern. In addition, the stock has also broken out from the Ichimoku cloud on a monthly scale.
Traders are advised to buy the stock in the range of 650 – 630 with a stop loss of 575 for the upside potential target of 770 in the next 3 – 4 weeks.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
