Real estate, cement, infrastructure are showing weakness in technicals. Whereas, auto especially two-wheelers, pharmaceutical, and FMCG are showing resilience on a technical front.
Ideally, 10,450-10,500 are more important levels than 10,200 as it marks a coincidence of 200-Day EMA and 61 percent Fibonacci retracement, Umesh Mehta, Head of Research, Samco Securities tells Moneycontrol's Kshitij Anand.
Q) The Nifty50 rose nearly 6 percent, above 10,100 for the week ended June 5. But, consistent selling pressure below 10,200 capped the upside. How would you sum up last week's action?
A) Markets witnessed a three-month high in sentiments the past week. Just when everyone expected a downfall post GDP numbers and Moody’s downgrade on India, markets moved in the opposite direction. This was more of a 'FOMO' (fear of missing out) rally which was a mix of spare cash investments and short covering.
And going forward, 61 percent Fibonacci retracement levels can take Nifty50 to levels of 10,450-10,500 after which meaningful corrections can occur. However, if the pressure sustains below 10,200 then corrections can start earlier.
Q) What are the important levels to watch in the coming week? Do you think a breakout above 10,200 is possible?
A) Ideally, 10,450-10,500 are more important levels than 10,200. The 10450-10500 levels mark a coincidence of 200-Day EMA and 61 percent Fibonacci retracement.
Hence this is a stronger resistance for Nifty50 which can be a turning point for markets. But if pressure builds up around 10,200 early corrections can begin.
Q) Any important factors which investors should watch out in the coming week that are likely to chart market direction?
A) With the gradual opening of the lockdown in several states and with the domestic air-traffic rising slowly, ground reality impact on companies’ books will be a key indicator for the markets going forward. It would be interesting to watch how investor’s sentiments align with the ground-level situation.
Q) What is your call on the NiftyBank? What we are seeing is hot and cold moment for rate-sensitive stocks? What is causing all the volatility in the banking as well as NBFC space?
A) During any crisis, banking and financials are the worst affected. Lockdowns had brought the entire economy to a standstill which caused the biggest stress in banks and financials.
Hence, this space is expected to remain sideways under pressure. The overhang of the Supreme Court’s decision on interest during moratorium will further keep the pressure on Bank Nifty till June 12.
Q) There was plenty of action in the small-cap and mid-cap space – what is driving the optimism in the broader markets?
A) Small and mid-caps had experienced enough gloom in the past year and were already beaten down. Therefore, any small buying interest in broader markets caused large up moves in percentage gains.
Local investors also diverted a part of their money to these broader markets which drove further optimism.
Q) Which sectors are looking strong and which are looking weak based on technicals?
A) Real estate, cement, infrastructure are showing weakness in technicals. Whereas, auto especially two-wheelers, pharmaceutical, and FMCG are showing resilience on a technical front.
Q) Three trading ideas for the coming week with a time horizon of three to four weeks?
A) Here is a list of top 3 stocks which investors could look at going short:
Titan Company: Sell| Target: Rs 835| Stop Loss: Rs 1,010
UltraTech Cement: Sell| Target: Rs 3,600| Stop Loss: Rs 3,913
Maruti Suzuki India Ltd: Sell| Target: Rs 5,270| Stop Loss: Rs 5,900Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.