Considering the formation of mentioned candlestick patterns around the support levels, a pull-back move towards 10,350–10,400 cannot be ruled out.
A pull-back toward 10,350–10,400 cannot be ruled out this week. Very short-term traders can look for buying opportunities for few sessions, Jay Purohit -Technical & Derivatives Analyst, Centrum Broking Limited, said in an interview to Moneycontrol's Kshitij Anand.
Q) It was a volatile week for the Indian markets. The index managed to defend its 200-DMA but do you think the pain is over or in other words have we formed an intermediate bottom?
A) Last week wasn’t that good for the bulls as we witnessed a sharp selling pressure in the first three sessions of the week.
On Tuesday, the Nifty breached its trading range of 10300 – 10640 levels on the downside and thus resulted into a breakdown from the ‘Bearish Flag’ pattern on the daily chart, which is a negative sign for the index.
But, the Nifty took support around the ‘200 DMA’ on Wednesday & Thursday and formed ‘Tweezer Bottom’ on the daily chart.
Also, we witnessed a formation of ‘Hammer’ pattern on Thursday. Due to some pull-back in last two sessions, the index concluded the week with a loss of 2.21 percent over its previous close.
Considering the formation of mentioned candlestick patterns around the support levels, a pull-back move towards 10,350–10,400 cannot be ruled out. Hence, very short-term traders can look for buying opportunities for few sessions.
Q) How are FIIs positioned in the markets? They have already sold over Rs18,000 crore in the Indian market in Feb as per provisional data.
A) Foreign institutional investors (FIIs) were a net seller in the cash market segment to the tune of Rs.18619 crore. While their activity in equities remained subdued so far in the month of March.
However, they took mixed positions in the index futures in the last couple of weeks. Thus, not indicating any one-sided move from the current juncture.
Q) What should be the ideal strategy for mid & small caps post Budget which is attracting some bit of selling pressure?
A) In the last couple of months, we witnessed the carnage in many mid and small-cap counters. Most of the stocks have breached their strong support levels; while a few managed to hold the demand zone.
Despite the decent correction, we are not very comfortable in going long in most of the mid and small cap counters at the current juncture.
Thus, one should not look for taking aggressive longs in this space and rather focus more on largecap names.
Q) What should be the strategy -- buy on dips or sell on rallies in the coming week?
A) Though a pull-back move is on the cards, the overall chart structure remains negative as we witness a formation of ‘Bearish Engulfing’ pattern on both weekly as well as monthly time frame charts.
The index is expected to correct again after retesting the breakdown level of the ‘Bearish Flag’ pattern on the weekly chart. Thus, one should look to exit from the long positions on bounces as we may again test the 10100 – 10000 levels in the coming few weeks.
Thus, traders are advised to hedge their long-only portfolio around 10400 level with long-dated Nifty put options.
Q) Top 3-5 stocks which are looking attractive at current levels based on technical?
A) Though the index may see selling pressure at higher levels, some stocks have corrected to their strong support levels and are giving good buying opportunity. Below is the list of the same.
Motherson Sumi: BUY| Target Rs350| Stop Loss Rs298| Return 10%
The stock has corrected sharply in the last few days and has reached to its strong support zone of Rs300-305. The stock made a ‘double bottom’ formation and has started rebounding from the mentioned support zone to form a couple of 'Hammer' candles on the daily time frame charts.
This was followed by a positive momentum in the last couple of trading sessions, which indicates a possibility of a reversal in the short term trend.
Also, the momentum oscillator ‘RSI’ is showing positive divergence on the daily chart and is showing strength in the counter. Looking at the current chart structure, we are expecting a bounce in the stock towards Rs350 levels in coming couple of weeks.
Any decline towards 310 should be used as a buying opportunity with a stop-loss of 298.
Bharti Airtel: BUY| Target Rs445| Stop Loss Rs379| Return 11%
The stock is moving in a corrective phase from the last ten weeks and has also corrected by more than 25 percent in the same time. Currently, we are witnessing a formation of a Bullish Harmonic pattern called ‘Bullish Bat’ on the daily charts.
The Potential Reversal Zone (PRZ) is placed in the zone of Rs387 – 393. The ‘RSI’ oscillator is showing a series of positive divergence on the daily chart, indicating a possibility of a short-term reversal.
Looking at the above technical evidence, traders are advised to buy the stock on declines for the target of Rs435 – 445 with a stop-loss below 379.
Jubilant FoodWorks: BUY| Target Rs2350| Stop Loss Rs1960| Return 14%
The stock has outperformed the broader market in the recent past as it didn’t correct too much in the ongoing correction seen in the market.
From the last two sessions, the stock is showing strength and is now coming out of a short-term consolidation phase. Also, the ‘RSI’ on the weekly chart is showing a positive reversal and thus indicating resumption in the uptrend in the coming weeks.
Considering current chart structure, we advised traders to buy the stock with the stop-loss of 1960, and on the upside, we may see targets ranging from 2300 – 2350 levels.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.