According to Dharmesh Shah of ICICI Securities, the bouts of volatility tracking geopolitical escalations should be seen as a buying opportunity as he expects Nifty to hold the key support of 24,500 in the current week.
The Friday’s RBI policy helped Bank Nifty to clock a fresh all-time high after 6 weeks hiatus. This would provide impetus for Nifty to challenge the upper band of consolidation placed at 25,100 and open the door for next leg of up move towards 25,500 in coming weeks, said the technical head of ICICI Securities in an interview to Moneycontrol.
He expects the Bank Nifty to endure its northbound journey and head towards 58,000 in coming months.
Will the Nifty 50 be able to sustain current levels (25,000) even though the RBI has frontloaded rate cuts?
On expected lines, the Nifty managed to hold 24,500 mark and staged a strong rebound as RBI Policy boosted market sentiment. Consequently, equity benchmark resumed uptrend after a two-week breather and settled eventful week (ended June 6) at 25,003, up 1 percent.
The resumption of uptrend after shallow correction confirms that the bull market template is still intact. Meanwhile, Bank Nifty clocked a fresh all-time high after 6 weeks hiatus that would provide impetus for Nifty to challenge the upper band of consolidation placed at 25,100 and open the door for next leg of up move towards 25,500 in coming weeks.
What is the strategy you would apply in the current market environment?
The elongation of rallies in the benchmark followed by shallow retracement signifies robust price structure. Further, the broader market outperformance was clearly reflected in the ratio chart of Nifty 500 / Nifty 100 that continued to inch northward. The current rally is backed by significant improvement in the market breadth as 55 percent stocks of Nifty 500 universe are trading above their long term 200-day SMA compared to a month back reading of 30 percent that augurs well for durability of ongoing up move.
Hence, bouts of volatility tracking geopolitical escalations should be capitalized as a buying opportunity as we expect Nifty to hold the key support of 24,500 in the coming week.
Which sectors are looking strong for buying opportunities, based on the charts?
The RBI surprised the market with a larger-than-expected (50 basis points) rate cut that coupled with CRR cut would assist economic growth. Consequently, rate sensitive sectors like banking, NBFC, realty, auto, and capital goods would be in focus, going ahead.
Do you think it is a flag-and-pole breakout in the Bank Nifty?
After mid-April sharp rally Bank Nifty consolidated in a narrow range over past six weeks which has taken a shape of a Bullish Flag/ Pennat pattern. The Friday’s RBI policy fuelled the momentum in the financials that helped Bank Nifty to clock a fresh all-time high after 6 weeks hiatus. We expect, Bank Nifty to endure its northbound journey and head towards 58,000 in coming months.
Based on the charts, is this the beginning of a new leg of the up move in Nifty Realty?
The Nifty Realty index staged a strong rebound after taking support from 50 percent retracement of CY23-24 rally. The key point to highlight during this up move is that, the current pullback is strongest (36 percent) compared to H2CY24 pullback of 16 percent and 22 percent. The current strongest move supported by RBI policy outcome confirms conclusion of corrective phase, that in turn bodes well for next leg of up move.
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