The immediate resistance for Bank Nifty is placed at 32,400, and a sustained trade beyond this resistance will take the Index higher to levels of 34,000-34,700. On the downside 31,400-30,500 are key support areas, Aditya Agarwala, Senior Technical Analyst, YES SECURITIES said in an interview with Moneycontrol’s Kshitij Anand.
Q) Indian market remained volatile throughout the past week and closed in the red. What led to the price action?
A) Dalal Street ended the past trading week in the red, not before staging a swift recovery from the low point which was also the lower end of the broad trading range placed around 14,250-14,300 levels.
The index formed a Hammer candlestick pattern suggesting a temporary pause to the corrections within the trading range.
Moreover, the Indian market underperformed its global peers in the week gone by which clearly suggests that the domestic factor, which is the massive spike in the Covid-19 cases, forcing several states to take stern measures to curb the spread of the virus leading to a sudden halt in the economic activity triggering this selloff and underperformance.
Q) Small & midcaps also suffered slightly more than the benchmark indices. What is leading to pressure on broader markets – is it a rise in inflations which could weigh on RBI, lockdown/curbs could slowdown economic activity etc?A) Broader markets ended the week with sharper cuts in comparison to the benchmark Indices as traders went into a profit booking mode due to the sharp rising cases in covid-19 forcing several state governments to order lockdowns, night curfews, and weekend restrictions which in turn would slow down the economic activity.
Moreover, retail inflation is rising steadily but still under the RBI target range of 2%-6% and a favourable monsoon may cool off any inflationary pressures that may pose a threat to the midcap and smallcap rally.
Broader markets should pick up pace again once the Covid-19 numbers start their southward journey.
Q) Sectorally, Realty and IT were top losers for the week gone by. What is weighing in these two sectors?
A) IT sector underperformed this week led by profit booking after a sharp run-up in prices in expectations of better-than-expected quarterly numbers.
Post results, profit booking is a normal course of action, and a further appreciation in US Dollars from here on may lead to a resumption of the uptrend in the IT sector especially the Midcap IT names.
Realty sector underperformance was mainly due to the fact we are witnessing a sharp surge in fresh Covid-19 infections which has forced several state governments to force lockdowns and curfews halting the economic activity.
However, following the serious correction this week, Nifty Realty Index is approaching a crucial support zone of 300 and a sustained trade above this support zone may trigger a bounce-back in the real estate stocks in the coming trading sessions.
Q) Any important levels that traders should watch out for in the coming week on Nifty and NiftyBank?
A) On the Nifty-50 traders should watch out for the lower and upper ends of the range i.e. 14,250 on the downside and 14,900 on the upside.
A breakout from the upper end would resume the uptrend; however, a breakdown below 14,250 which looks unlikely at the moment would push the Index to 14,000 levels.
The NiftyBank on the weekly chart has formed a Hammer candlestick pattern after a downtrend which suggests that the corrections may soon halt and a short-covering rally may be triggered.
The immediate resistance is placed at 32,400, and a sustained trade beyond this resistance will take the Index higher to levels of 34,000-34,700. On the downside, 31,400-30,500 are key support areas.
Q) Any top 3-5 stocks that are looking strong on the charts for the next 3-4 weeks?
A) Here is a list of top trading ideas -
Page Industries: Buy| LTP: Rs 30,230| Target: Rs 33000| Stop Loss: Rs 28,800| Upside 9%
The stock turned upwards from the lower-end of the Triangle support line suggesting bullishness. Further, a trade beyond 30850 will trigger a breakout from the pattern taking the stock to the recent highs. RSI is also in the bull territory confirming strength in the stock.
SBI Cards & Payments: Buy| LTP: Rs 973| Target: Rs 1050| Stop Loss: Rs 930| Upside 8%
The stock has broken out from a consolidation pattern on high volumes resuming uptrend. RSI has also turned upwards after forming a positive reversal confirming bullishness.
Alembic Pharm: Buy| LTP: Rs 1000| Target: Rs 1150| Stop Loss: Rs 920| Upside 15%
The stock is on the verge of a breakout from a Cup and Handle pattern neckline suggesting bullishness.
Further, 20-DMA has made a bullish crossover with 50-DMA confirming an uptrend. RSI too has entered the upper end of the bull territory.
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