The momentum in equity markets is expected to continue as there is no strong near-term resistance, and call writing at 26,000 strike is seeing highest activity, indicating that the index may attempt to test its all-time highs, Rahul Ghose, Founder & CEO, Octanom Tech & Hedged.in said on May 13.
He added that a major selloff is only expected near the 26,000 level, and said this is also a good time to rotate capital into laggards with improving structures, rather than stocks that have already run up.
Edited excerpts:
The market rebounded sharply after the ceasefire announcement between India and Pakistan. Do you believe Nifty will definitely hit 25,000 by the end of this or next week and scale record highs by June? What are the levels to watch in the short term?
The ceasefire has indeed acted as a powerful sentiment booster, reducing geo-political risk premiums across asset classes. However, it’s important to contextualize this within the broader economic and earnings narrative. The recent rally is also supported by better-than-expected Q4 earnings, strong FPI inflows, and macro stability.
With yesterday’s rally and an extremely strong green candle supported by decent volumes, 25,000 levels are extremely likely to be hit in the short to medium term. Nifty looks all set to test the gap area around 25,640-25,740. The momentum is expected to continue as there is no strong resistance. In fact, with highest Call writing at 26,000 strike, one will not be surprised if Nifty attempts to go near its all-time high levels. One can see some major sell off only near 26,000 range. 24,164-23,935 is a strong support & 25,640-25,740 is a resistance in the near term.
What trading strategy would you advise after this sharp rally?
Post such a sharp move, discipline is the key. I’d recommend a measured momentum-following approach rather than aggressive chasing. Here are three elements of a prudent strategy:
1. Trail stop-losses on existing longs to protect gains—especially in sectors that rallied 8–10 percent in the past week (like Defence, PSU Banks, and Capital Goods).
2. Use any dip towards support levels as a buying opportunity, especially in stocks with improving earnings and relative strength.
3. Avoid fresh short positions unless key support levels are broken.
This is also a good time to rotate capital into laggards with improving structures, rather than stocks that have already doubled or tripled in the recent run-up.
Do you see the momentum taking Bank Nifty beyond the previous record high this week?
Bank Nifty has no major resistance on any time frame. In the very short-term it is likely that it will retest the level of 56,100 above which it is in an unchartered territory. The weekly & monthly RSI levels of Bank Nifty are also around 65-67 levels suggesting that index is in a strong momentum & still time to go before it gets into overbought zone. Intermittent volatility notwithstanding Bank Nifty in all likelihood can take out the previous high. Every dip can be taken as a buying opportunity.
Which two stocks would you like to buy now?
In the wake of the current market scenario, one can look at the stocks which are likely to benefit from the market’s recovery. After a lull period of around 5 to 6 months, HDFC Asset Management Company (AMC) has started to show some strong momentum. With Bank Nifty at an all-time high, & Nifty close to its all-time highs, it is likely that the AMC stocks could show revival. HDFC AMC looks positive with a possibility of hitting Rs 4,900 and above in the near term.
In the consumer space. Britannia Industries, and Godrej Consumer Products look attractive. Both are showing reversal on the bigger time frames like monthly and quarterely, with no near-term resistance in sight. Godrej Consumer Products as well as Britannia have broken out of a consolidation pattern on daily chart & expected to be in a strong momentum.
Do you expect Midcaps and Smallcaps to outperform benchmark Nifty 50?
Yes, with caveats.
The broader market is likely to outperform in this phase, particularly in sectors aligned with government capex, manufacturing, and rural revival themes. Recent participation has broadened. Nifty midcap as well as small cap have bounced from a monthly 20 EMA with positive candlesticks like bullish hammer & showing signs of hitting a new high.
However, valuations are now rich in some pockets, and stock selection becomes extremely critical. Focus should remain on midcaps with earnings momentum, strong balance sheets, and sectoral tailwinds. Avoid speculative or low-quality names, even if they are participating in the rally.
Are HFCL and Escorts Kubota looking strong on the chart?
HFCL is looking extremely positive from a reward-risk perspective. The stock is right around a monthly support level of Rs 64-71 & shown initial positive momentum with series of Doji & a Bullish Hammer formation. Once it crosses Rs 87.5 levels the next resistance is straight around Rs 110 levels indicating good profit potential. Someone with a 3 to 6 months perspective can surely look at HFCL. The downside is limited.
Escorts Kubota is on the verge of a symmetrical triangle breakout with good volumes. If price manages to sustain above Rs 3,460-3,470 one can easily expect Rs 3,700 and above levels in the short term. Also it has support from higher time frame charts as the stock is also trading at the monthly support levels.
Both stocks look positive & can be considered from a short-medium term perspective.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
