After significant recovery in the passing week, and considering the current chart structure, Sudeep Shah of SBI Securities believes the April series will be very healthy for the market.
Further, VIX trades below both its short and long-term moving averages, market sentiment appears calm, signaling a return of risk-on mode to D-Street. A stable VIX typically supports a bullish outlook, paving the way for continued upward momentum in equities, he said in an interview to Moneycontrol.
Sudeep Shah advised buying Axis Bank and PCBL for the short term, however, he is bearish on the Nifty IT index. "On a monthly scale, the Nifty IT slipped below its 20-month EMA level, and it is in falling mode. Most noteworthy, the 14-period monthly RSI is quoting below its 9-month average, and both the lines are in falling mode," he reasoned.
Is the rally sustainable? If yes, then will the Nifty 50 surpass February swing high next week or in the April series?
Just like a T20 game where momentum can shift in a matter of overs, the stock market has shown a stunning comeback this week ended March 21. After consolidating for a while, Nifty broke out on Tuesday and delivered a power-packed rally, closing the week at 23,350 with a stellar 4.26% gain. This was its best weekly performance since February 2021, proving that, much like cricket, market sentiment can change instantly!
The decline in volatility further reinforces this shift, with India VIX dropping over 5% during the week. As VIX trades below both its short and long-term moving averages, market sentiment appears calm, signaling a return of risk-on mode to D-Street. A stable VIX typically supports a bullish outlook, paving the way for continued upward momentum in equities.
From its recent low of 21,964, Nifty has surged nearly 1,400 points (6.31%) in just 13 trading sessions, which was much in line with our expectations. The index has not only crossed its 20 and 50-day EMAs but is now testing its 100 and 200-day EMAs. Meanwhile, the daily RSI (Relative Strength Index) remains in bullish territory and continues to rise, signaling strong momentum.
Hence, we believe the index is likely to continue its northward journey in the short term. However, much like teams pacing themselves in a long tournament, the market may take a short breather over the next 2-3 trading sessions. But just as every IPL match has its standout performers, stock-specific action is expected to remain strong!
Talking about crucial levels, the zone of 23,130-23,100 is likely to provide a cushion in case of any immediate decline. On the upside, it is likely to test the level of 23,600, followed by 23,800 in the short term.
Does the current rebound mean the April series will be very healthy for the market? Additionally, will the Bank Nifty hit December 2024 swing high in April?
Yes, considering the current chart structure, the April series will be very healthy for the market.
Bank Nifty has strongly outperformed the frontline indices, surging over 5% last week, which was its best weekly performance since December 2023. On a weekly scale, it has formed a sizeable bullish candle, reinforcing the strength of the ongoing recovery. The index has decisively moved above its short and long-term moving averages. Notably, the 20 and 50-day EMAs are gaining upward momentum, while the declining slope of the 100 and 200-day EMAs has slowed significantly, which is a bullish sign.
Momentum indicators are also aligning with this bullish sentiment. The daily RSI remains in a strong position, continuing its upward trajectory, while the daily MACD (Moving Average Convergence Divergence) histogram suggests an acceleration in buying momentum—both pointing towards further strength in the coming sessions.
Talking about crucial levels for the Bank Nifty, the zone of 50,100-50,000 will act as a crucial support area for the index. As long as it sustains above the psychological 50,000 mark, the path remains open for an upside move toward 51,100, followed by 51,700 in the short term.
What are your top two picks for next week?
The Nifty Private Bank has given a Symmetrical Triangle breakout on a daily scale, which is a bullish sign. The stock has surged above 100-day EMA level for the first time after December 2024. Further, the 20 and 50-day EMA started edging higher. The momentum indicators and oscillators are also suggesting strong bullish momentum in the stock. Hence, we believe the stock is likely to continue its upward journey and test the level of Rs 1,150 in the short term. On the downside, the zone of Rs 1,040-1,035 is likely to provide the cushion in case of any immediate decline.
PCBL has given a consolidation breakout on a daily scale. This breakout is confirmed by above 50-day average volume. Further, the daily RSI surged above 60 mark for the first time after December 2024, which is a bullish sign. Hence, we recommend accumulating the stock in the zone of Rs 420-425 level with the stop-loss of Rs 403 level. On the upside, it is likely to test the level of Rs 460 in the short term.
Do you expect the new leg of the rally in the Nifty Pharma index?
Yes, Nifty has marked the low of 19,633.95 in early March, and thereafter, it has started marking the sequence of higher tops and higher bottom on a daily scale. Further, the ratio chart of the index as compared to the Nifty index is started edging higher. Most noteworthy, it has surged above its short and long-term moving averages. The daily RSI is surged above 60 mark for the first time after January 2025. Hence, we believe the index is likely to continue its upward journey and test the level of 22,200 in the short term.
What do you make out of Nifty IT's monthly chart?
On a monthly scale, the Nifty IT slipped below its 20-month EMA level, and it is in falling mode. While the rising slope of 50, 100, and 200-month EMA has slowed down significantly, which is a bearish sign. Most noteworthy, the 14-period monthly RSI is quoting below its 9-month average, and both the lines are in falling mode. Hence, we believe the Nifty IT is likely to witness bearish momentum in the next couple of months.
Are you bullish on BSE?
Yes, recently, it has marked the low of Rs 3,682 on March 11 and thereafter started moving higher along with relatively higher volume. The stock has surged by over 29 percent in just 7 trading sessions. Along with this rise, the stock has surged above its 20 and 200-day EMA level. Further, the daily RSI is quoting above its 9-day average, which is a bullish sign. Hence, we believe the stock is likely to continue its upward journey in the next couple of trading sessions.
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.
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