PSU banks, auto and pharma indices look strong on the medium-term charts and they are likely to perform well in the near future, according to Vinay Rajani of HDFC Securities.
With the recent rally, the support for the Nifty has shifted up to 17,800, which happens to be the previous swing high, says the seasoned financial analyst. He expects the Nifty to register all-time high in November.
On the rupee, the CMT and Senior Technical and Derivative Analyst at HDFC Securities says the currency has depreciated enough against the US Dollar and they don’t see much downside in the currency from current levels. “Some of the technical oscillators have turned overbought in USDINR pair on monthly charts,” he shares in an interview with Moneycontrol. Excerpts:
Do you expect the more steam to be left in PSU bank index that outperformed other indices last week?
Yes, PSU Bank index seems to have entered positional uptrend with strong momentum. After long time, index is sustaining at higher levels and supply is getting absorbed at lower levels. Nifty PSU Bank Index has formed bullish Inverted Head and Shoulder pattern on the weekly chart, which indicates continuation of an uptrend.
Index has recently surpassed the crucial resistance of previous swing high of 3,267, which can act as a support going forward. Next target for PSU Bank index is seen at 3,650 odd levels in the short term. Support should be utilized to initiate fresh long positions in the PSU banks.
The auto sector gained significant strength in Diwali week. Do you expect the northward journey to continue in coming weeks too?
Yes, northward journey is likely to continue. Nifty Auto Index has registered new all-time high at 13,486 recently on November 1, 2022. There was multiple top resistance around 13,400 odd levels, which is now taken out on closing basis.
Auto Index is placed above all important moving averages and has been holding higher top and higher bottom formation on weekly and monthly charts.
Positional support for Nifty Auto index is seen at 12,500 odd levels, which can be utilised to initiate longs in case of running correction. Resistance for the index is seen around 14,400.
Do you think the rupee is preparing ground to make a move towards 85-86 against US dollar in coming weeks?
No, rupee has depreciated enough against the US Dollar and we don’t see much downside in the rupee from current levels. Some of the technical oscillators have turned overbought in USDINR pair on monthly charts.
A level around 83.5-84 could act as a strong resistance for USDINR spot. Any levels below 81.90, could result in to bearish trend reversal for USDINR, which could drag it towards 80 odd levels.
Do you think the Nifty has enough strength to register new all-time high above 18,604 in November?
Nifty has surpassed the crucial resistance of 18,000 and has been sustaining above it for last two trading sessions. It’s an encouraging sign for the bulls. On monthly basis, Nifty has closed at all-time high in October 2022.
On daily Chart, Nifty has closed at the highest level since January 17, 2022. All-time high on daily basis was registered in October 2021 at 18,604.
Going by seasonality charts, November has been the second best performing month after December in monthly percentage return terms. October ended with the gain of more than 5 percent, which is far above the average returns of October month in last 29 years.
Support for the Nifty has shifted up to 17,800, which happens to be the previous swing high. So yes, we expect Nifty to register new all-time high in the month of November.
After looking at charts, what are the sectors that could see major action in coming weeks?
PSU banking, auto and pharma indices looks strong on medium term charts and they are likely to perform well in the coming times.
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