The index has been trading below 50-Days SMA and also finding resistance at the falling trendline that suggests some bearishness until it sustains above 14,900 marks, Sumeet Bagadia, Executive Director at Choice Broking said in an interview with Moneycontrol’s Kshitij Anand.
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) During the week, bears were in action as after a gap-up opening on Monday trading session, we witnessed further correction throughout the week amid weak global cues and rising COVID-19 cases that may call back the uncertainties on the economic outlook.
The Nifty index ended at 14681 levels on Friday whereas BankNifty settled at 32169.55. Banking, Metal, IT & Realty sector dragged the index whereas PSU, Media, FMCG supported the index during the week.
Technically, the index has been trading below 50-Days SMA and also finding resistance at the falling trendline that suggests some bearishness until it sustains above 14,900 marks.
At present, 14900 will act as crucial resistance for the short term whereas 14600 is immediate support. Either side breakout will decide the market direction for the long term.
If Nifty sustains below 14600 then we will see 14400-14300 levels, whereas a breakout above 14900 will take Nifty towards the level of 15100-15300.
Q) Sectorally, Utilities index closed higher for the week. What led to the price action?
A) BSE utilities index started the week on a positive note and rallied almost 5 percent consecutively for three days in a row as all the components like GAIL, Torrent Power, Gujarat Power, GE India, etc. have performed outstandingly throughout the week, which supported the index to move higher.
But, in the last trading session of the week, we witnessed some profit booking that pushed the BSE Utilities index more than 2% on Friday.
It was just a profit booking after an immediate rally although the index has a good potential to move upward as the Power & Gas sector continued in action which may support the index towards the new highs.
At present, the index has immediate support at around 2280, followed by 2230 levels, whereas 2416 could be a resistance zone for the near term.
Q) IT index was the top sector loser down over a percent. Can it be attributed to profit-booking?
A) The Nifty IT has shown correction this week and closed with a loss of 2.5 percent at 25,588 levels. On the weekly chart, the index has formed an Open Bearish Marabozu candle, which points out the weakness in the counter.
Moreover, the index has taken support from the middle band of Bollinger Band as well as 21-WMA which points out bounce-back movement in the counter.
Furthermore, the index has a strong support zone at 25000-24900 levels which suggests that if the index sustains above it then it can continue its major bullish trend.
Momentum indicator MACD is showing positive crossover, and the index took support from 100-DMA. For the upcoming week, the index is likely to find support at 25000 level.
Q) Please suggest 3-5 trading ideas for the next 3-4 weeks?
A) Here are top trading ideas:
Britannia Industries: Buy| LTP: Rs 3500| Target: Rs 3700| Stop Loss: Rs 3399| Upside 6%
On the weekly chart, the stock has formed a Hammer Candlestick pattern with the support of its Horizontal Trend line support that can be considered a Bullish Reversal formation and indicates an upside movement in the counter.
Moreover, the stock has taken a support at 3400 level which is a 78.60% Fibonacci Retracement level of its previous up move which shows a northward movement towards its upside level of 38.20% F. R Level.
The True Strength Indicator has given a positive crossover on the upside where it is indicating good strength for the stock to have a movement on the upside.
On an hourly chart, the stock has been trading with a positive crossover of 21, and 50 Days Moving Average which can be considered a Bullish Crossover that shows a Bullish movement in the counter.
Biocon: Buy| LTP: Rs 388| Target: Rs 420| Stop Loss: Rs 370| Upside 8%
On a weekly chart, the index has confirmed the Doji candlestick pattern at the bottom that suggests an upside rally in the upcoming sessions.
On an hourly chart, the stock has been trading with a positive crossover of 21 & 50 Days Moving Average that can be considered a Bullish Crossover which shows a Bullish movement in the counter.
The 14-day RSI has risen to 47 levels, approximately from being previously below the 40 level, which indicates a clear strong buy for the stock, and an upside movement is expected from the current levels.
The 10-day Momentum Indicator is pointing towards the upside, indicating a good positive price action for the stock.
L&T: Buy| LTP: Rs 1415| Target: Rs 1520| Stop Loss: Rs 1340| Upside 7%
On the weekly chart, the stock has formed an Open Bullish Marabozu Candlestick Pattern that suggests buyers are active and any upside momentum can be seen in the upcoming session.
Furthermore, the stock has given a breakout from its upper band of Falling Wedge formation, which is a reversal formation and signifies a bull run in the counter.
Moreover, the stock has been trading above its 21-Days Moving Average that suggests that the stock has a great potential to move further.
Additionally, the daily momentum MACD indicator is reading with a positive crossover and has given a close above the Zero line that suggests a positive rhythm along with strength in the counter.Disclaimer
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