According to Ashish Kyal, Founder and CEO, Waves Strategy Advisors, the fact that the MACD (moving average convergence / divergence) indicator for Sakthi Sugars is above 0, and the MACD line has gone above the signal line, indicates bullish momentum has increased in the stock and may continue in the coming session. If its price goes above Rs 43.70, the positive trend will gain momentum and go to Rs 47 or higher.
Kyal, who has more than two decades of experience in the capital market, also sees a bullish trend for Infosys. "Once the short-term turmoil is over, we expect the stock to pick up. Crossing the Rs 1,960-level could lead to increased buying pressure, reinforcing the bullish sentiment and confirming a potential breakout," he said, speaking to Moneycontrol.
Edited excerpts below.
Are the charts telling you that the market may form a double bottom near the September lows, and rebound from there?
On Friday, the Nifty again had a gap-down opening due to weak global cues. During the day, the benchmark index witnessed a pullback, but eventually moved down to close at 25,014, a loss of 0.93 percent. On the weekly charts, the trend seems to have reversed on the downside, as we closed below prior weekly low. On the daily chart, for the past four consecutive days there is no single close above the previous day’s high, which is a negative sign.
Over the short term, as the indicators signify oversold conditions and prices are near the psychological 25,000 level, a pullback to 25,200 followed by 25,361 is possible. However, any breach below Friday’s low of 24,970 will open up the target of 24,700 or lower for the index.
Do you see the Bank Nifty falling by another 1,000 points? Will it break its 200-day EMA this month before bouncing back?
On the daily charts, the Bank Nifty has fallen more than 5.09 percent since September 27, reflecting increasing bearishness. In the previous session (On Friday?), the index experienced a gap-down opening, failed to breach the prior day’s (Thursday's?) high, and closed below the previous day’s (Thursday's?) low, highlighting that the underlying trend is in favour of the bears. We can expect the index to fall further if it breaches the important support level of 51,300, which can accelerate selling pressure in the underlying.
The Bank Nifty's 200-day EMA is near 49,400, which is about 2,000 points away from where we're at currently. The index has closed below its 50-day EMA already and a breach below 51,300 can result in Bank Nifty touching the 50,400 level. It is too soon to conclude if we will challenge 200-day EMA at this point, but it cannot be ruled out unless we see a close back above 52,000 levels.
In a nutshell, the current trend for the Bank Nifty is on the negative side. A break below 51,300 can drag prices lower to 50,400 or lower, as long as it trades below the 52,000 level.
Is it the right time to pick ITC, or should one wait some more?
According to the daily charts, ITC has been witnessing sell-offs after reaching a fresh high of Rs 528.50. Its stock price has been closing below the previous day’s low since September 30, indicating profit-booking. Currently, we expect the short-term correction to continue and any dips towards Rs 490 levels can be used as a buying opportunity to ride the trend. We can go long on ITC as the FMCG sector is expected to do well. We can buy on dips around the Rs 490 level and move up towards Rs 530 — as long as the Rs 477 level is intact.
What is your strong bet in the current market scenario?
Sakthi Sugars rallied more than 2.81 percent in the previous session. The stock is moving in a rectangular manner over the last few days, indicating accumulation. A daily close above Rs 43.70 will confirm a breakout of the pattern. Its MACD is above 0 and the MACD line has gone above the signal, indicating that bullish momentum has increased in the stock and may continue in the coming session.
In short, if the stock price crosses Rs 43.70, the positive trend will gain momentum and go to Rs 47 or higher, as long as the Rs 41.70 level is intact.
After seeing the monthly and three-monthly charts, do you expect a strong rounding bottom breakout soon in Infosys ?
Infosys is trading near the neckline of the breakout pattern. We can see short term volatility due to selling pressure in the broader market. Overall, the stock has shown corrective decline against an impulse rise as per the Elliott wave pattern. This suggests that the overall trend for the stock is still bullish, and once the short-term turmoil is over, we expect the stock to pick up.
Crossing the Rs 1,960-level could lead to increased buying pressure, reinforcing the bullish sentiment and confirming a potential breakout.
In a nutshell, the current trend for Infosys is positive. A break above Rs 1,960 can lift the prices towards Rs 2,080, as the Rs 1,850 level holds on the downside.
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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