Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, says the benchmark indices have been consolidating since the middle of February and the short-term correction is an opportunity to create fresh long positions before the next leg of the rally begins.
The analyst is of the view that if the Nifty goes past 14,900-15,000, it will lead to the resumption of a larger uptrend. In an interview to Moneycontrol’s Kshitij Anand, Ratnaparkhi says though the telecom sector has taken a beating, Bharti Airtel looks set for a sharp bounce back. Edited excerpts:
The Sensex and the Nifty50 fell by over 1 percent each in the week gone by. What led to the price action?
The benchmark indices have been in the consolidation phase since mid-February. The consolidation was taking place in a channelised manner on the daily chart. On March 19, the Nifty had taken support near the lower channel line.
As a result, the index attempted a bounce at the beginning of this week. On the upside, the index tested its crucial daily moving averages where it witnessed a fresh round of selling. That resulted in a decline in the week gone by.
Any factors that investors should watch out for in the April series?
Over the next few weeks, the market participants need to watch out for the hurdle zone of 14,900-15,000.
Once the Nifty takes out this barrier, then it will be an indication that the index is getting out of the consolidation phase and is resuming the larger uptrend.
Small and midcaps underperformed. Are investors booking profits in the broader market space after the recent rally?
In the case of the broader market, the previous rally lasted longer as compared to the Nifty. The benchmark index topped out in mid-February, whereas the small and mid-cap indices continued to rally till the first week of March after that we have seen profit-booking in this space.
Nevertheless, the short-term correction is providing opportunities to the market participants to create fresh long positions before the next leg of the rally begins.
BSE auto and telecom sectors cracked by over 4 percent each. What led to the price action?
As you rightly pointed out, the auto and telecom sectors had a significant decline. Various parameters acted as catalysts on the way down. The key question is what’s in the offing?
While autos can form a short-term base for themselves. One stock from the telecom space looks set for a sharp bounce back and that is Bharti Airtel.
After correcting for the last couple of months, the daily momentum indicator is now showing positive divergence, which can lead to a significant upside to 575 over the next few sessions
Any three-five trading ideas for the April series?
Here is a list of trading ideas for the April series:
Godrej Consumer Products: Buy| LTP: Rs 710| Stop Loss: Rs 680| Target: Rs 773| Upside 8%
The stock has formed an Inverted Head & Shoulders pattern and has broken out on the upside. The daily momentum indicator is in line with the price breakout. The pattern breakout is accompanied by volumes as well.
HDFC Bank: Buy| LTP: Rs 1492| Stop Loss: Rs 1448| Target: Rs 1590| Upside 6%
After a short-term correction, the stock has taken support near the 61.8 percent retracement of the previous rally as well as near 20-WMA. Thereon, the stock is starting a fresh leg on the upside. SAIL: Buy| LTP: Rs 76.70| Stop Loss: Rs 72.80| Target: Rs 85| Upside 10%
The stock recently found support near multiple technical parameters. Over there it formed a bullish outside bar and started rallying again. It is expected to head towards its weekly upper Bollinger Band
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