The Nifty is likely to consolidate in the 22,300 – 21,700 range in absence of any near-term trigger ahead of the quarterly results announcement which starts in April, according to Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas.
After the recent turmoil in technology stocks, he does not see any evidence of a trend reversal in the sector. "Buying them because they fell sharply is not advisable," says the technical expert seasoned for over 12 years in the equity markets. In an interview to Moneycontrol, Gedia shares his views on the technical aspect of the market. Here's how the interaction unfolded:
Do you think the Nifty has made the lower top and is now marching towards a fresh record high?
The correction in the Nifty from a high of 22,526 is a five-wave decline which means that a short-term top is in place. The recent pullback from the lows of 21,710 appears to be overlapping and hence we conclude that it is a retracement of the fall and not the beginning of a new leg of up-move.
The Nifty is likely to consolidate in the range of 22,300 to 21,700 in absence of any near-term triggers ahead of the quarterly results announcement which starts in April.
Is it the right time to pick up technology stocks that fell sharply last week?
The recent correction in the Nifty IT index and IT stocks has only aggravated the ongoing weakness in tech names. Most of the heavyweights of the IT index such as TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra closed around the lows for the day and also the week.
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As of now, we do not have the evidence of a trend reversal and hence buying them because they fell sharply is not advisable. Typically, after a sharp decline it consolidates and builds a base before resuming its up-move again. Thus, we would keep them on our watchlist and look for signs of strength before we recommend it to our clients.
Which are your top two picks for current truncated week?
LIC Housing Finance has broken out of a falling channel and is forming higher tops and higher bottoms on the hourly time frame chart indicating trend reversal from down to up and is now in the process of retracing the fall from Rs 672 to Rs 559. The open interest also increased by 2.7 percent indicating a long build-up. The retracement is still not complete and can continue during the current week and hence one can buy LIC Housing Finance with stop-loss at Rs 584 and for a target of Rs 616 – 629.
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Aarti Industries has broken out of a bullish flag pattern on the daily charts which has been accompanied by above average volume indicating that it is a genuine breakout. Daily Momentum indicator has a positive crossover which is a buy signal. The pattern target suggests an upside till Rs 672 – 679 and hence we recommend going long with a stop-loss of Rs 642.
Are the charts telling you that Bank Nifty is moving towards 48,000 in the coming days?
Bank Nifty, after falling for nine consecutive trading sessions, is also in the process of retracing the fall (seen from 48,161 to 45,829). The key retracement levels are placed at 47,270 and 47,662. So, there could be a possibility of the Bank Nifty moving close to 47,500 in the coming days.
Do you think the Nifty Midcap 100 index has made a double bottom and is ready to march towards 50,000 now?
The Nifty Midcap index corrected around 9 percent from the highs and fall halted around the 45,300 mark which coincided with the 38.2 percent Fibonacci retracement level of the October 2023 to February 2024 rise.
The quantum of the current decline (9 percent) is in line with the September 2023 – October 2023 (9.7 percent) decline. However, in terms of time, the correction is just a few weeks old and hence we expect it to consolidate before resuming its up-move. As of now, it is in pullback mode which can extend till 47,860 – 48,000 mark.
Do you see the Nifty Auto index surpassing its previous record high in coming days?
The Nifty Auto index has been one of the outperformers in the recent rally. The constant up-move in stocks like Bajaj Auto and Tata Motors has helped it to stay at elevated levels. Also recently with stocks like Maruti Suzuki India joining in the rally is likely to further aid the up-move in the index.
So, there is a high probability that the Nifty Auto index can surpass its previous record high in the coming days.
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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