After the recent big rally, the Indian market is subdued today. In an interview to CNBC-TV18, Daryl Guppy, guppytraders.com says he expects some retracement and consolidation around 5,700.
He hase an upside target of around 6,400 for the Nifty. "For the Sensex, the upside target is around 21,000. In the next three-six months period, we can see those targets being achieved," he adds.
Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.
Q: It has been a strong run for our market of around 9-10 percent in the past month. Which key technical levels are you watching out for the Nifty in particular?
A: It is a buying opportunity. We have had the Nifty break above that key resistance level of 5,700. So, we expect to see some retracement and consolidation around 5,700. Individual stocks will have strong underlying trends where the price retracement is coming back to that trend because they will then develop good strong rebounds. This is a bullish situation; this is a temporary pullback in a bullish environment.
Q: At what point, would you worry that the Nifty’s uptrend is perhaps getting challenged?
A: I worry everyday. I would really start to worry, if the market came back to around 5,600. That’s a fairly major pullback; it is a previous high on the Nifty. We can say a retracement coming back to around 5,600 and then developing as a strong band. If we apply Guppy Multiple Moving Average Analysis to the Nifty and to the Sensex, the short-term group of averages has moved up very strongly and it dragged a long-term group of averages investors up with it as well. We are going to see investors coming back into the market as traders sell-off and take short-term profits.
Q: What is the near-term target for the Nifty or the Sensex looking like?
A: In terms of the Nifty, we have an upside target of around 6,400. It doesn’t mean we are going to get there in the next two-three weeks, but this is the longer term upside target.
For the Sensex, the upside target is around 21,000. We calculate that by taking the width of the trading band and projecting that upwards. This is not going to be in the next four-five weeks, but this is a solid breakout, we are beginning to develop a solid uptrend. So, over the next three-six months period, we can see those targets being achieved.
Q: Within the Nifty, would there be any specific stocks that will be the flag bearer of this rally that would be the best gainer, the outperformer?
A: It is hard to establish which will be the outperformer or the flag bearer for the rally. But if we look at Bharti Airtel, for the moment, we have got a classic Guppy Multiple Moving Average (GMMA) breakout. This bounce is hugely associated with a long-term change in the direction of the trend.
If you look at Infosys, it has a very strong momentum trade, but the underlying GMMA trend is very strong. That means when the price comes back, we can buy with a high level of confidence that it is likely to rebound from that underlying trend.
If you look at Reliance Industries, we are buying on the trend rebounds, we are buying into the developing rallies.
Q: What about Brent crude and rupee?
A: Brent crude, the important thing today is it is locked in a sideways trading band. We have been trading between USD 80- 110 per barrel for more than a year. This is a non-directional market.
We are looking at a pullback and a retest of USD 88 per barrel, which is the support level, potentially dipping down as low as USD 78 per barrel again. But it is sideways trading with short-term rallies between USD 80 per barrel at the lowest level and USD 110 per barrel at the highest level.