With the market's bullish tempo still fairly active, investors have the choice to buy the dips when it comes to negotiating with quality growth-oriented stocks and selling the rallies of the weak links which have also scaled higher due to the ongoing liquidity flows, Sacchitanand Uttekar, DVP – Technical (Equity), Tradebulls Securities said in an interview with Moneycontrol’s Kshitij Anand.
Q) Nifty lost momentum in the second half of the week as it witnessed profit taking close to levels of 13000. What led to the price action in the week gone by?
A) Despite being a truncated week after a festive rally, our index registered a weekly close with a modest w-o-w gain of 0.62 percent taking the overall tally for the month to a stellar 10.45 percent on an MoM basis.
On a daily scale, the market was looking a little stretched around 13000 so what we witnessed during the week is a breather after a strong surge which signifies healthy profit booking.
Post-Diwali, the increase in cases of COVID not just in India but worldwide has also been one of the reasons for the pullback as many of the countries including some parts of India have implemented partial lockdown.
Q) F&O expiry will keep things volatile in the coming week. Any other factors which one should watch out for?
A) With earnings season over, the market will focus on economic recovery and development of the COVID vaccine & cases across the world.
Since last week, a couple of pharma companies have given positive results with respect to their clinical trials of covid vaccine development.
The big factor is the US stimulus package which will be a key trigger for global markets but the resistance in the successful transition of the US presidency is providing headwinds to the market. Positive COVID vaccine development is also making chances of a big stimulus package dim.
Q) What are the levels which one should track in the coming week? Important support levels in case Nifty starts to head south and what could pose as stiff resistance on the upside.
A) 13000-13090 remains the key zone for the bullish momentum to resume again towards 13570 while on the flipside supports are clearly placed at 12680 & 12510 respectively.
If the counter-trend witnesses signs of fresh impulse then the lower band could stretch further towards 12380-12050 respectively. Options data indicate a relatively wider range of 12000-13500 with its mid-point still placed around 12800, with progression in time this band is expected to contract relatively faster.
The expiry week would be followed up a long weekend & truncated week hence it’s likely that traders may refrain from carrying forward any aggressive positions on either side.
Q) What should be the strategy of investors for the coming week --- buy on dips, or sell on rallies or just stay put?
A) Markets from a valuation perspective have been on the higher side since last few years, but with the latest rally with markets now at life high & earnings season already priced in, investors have some better clarity to review their folios at such higher valuations.
The focus should be to retain quality growth-oriented stocks that have been consistent in their price & earnings performance while the weak links in their folios should be considered for creating liquidity.
With the market's bullish tempo still fairly active investors have the choice to Buy the dips when it comes to negotiating with quality growth-oriented stocks & selling the rallies of the weak links which have also scaled higher due to the ongoing liquidity flows.Disclaimer
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