"There's a possibility of the Nifty 50 dropping to around 21,000, i.e. the 200 DEMA (days exponential moving average), after the Lok Sabha election results are declared on June 4," Jigar S Patel, Senior Manager, Equity Research, Anand Rathi, told Moneycontrol in an interview
He feels, in the short term, a crucial level for the Nifty50 is 21,900, where a market rebound could occur.
Jigar, with more than nine years of experience in technical research, sees the possibility that Hero MotoCorp could test the Rs 5,000-level in the current week, as a breakout above the previous high not only validates the upward momentum but also serves as a confirmation of bullish strength in the stock.
Do you really see the Nifty moving down towards the 21,500-mark?
Since January 15, the Nifty has followed an upward channel pattern. The weekly charts indicate that the index seems oversold, potentially leading to a short-term recovery of 200-300 points.
Looking ahead, there's a possibility of the index dropping to around 21,000, i.e., 200 DEMA, after the Lok Sabha election results are announced on June 4. In the short term, a crucial level for the Nifty50 is 21,900, where a market rebound could occur.
Do you see the India VIX continuing its uptrend and crossing the 25 level as the market approaches the general election results?
At present, the India VIX has gained almost 80-90 percent after making a low of 9.85 last month. In the chart below, the VIX is at the 18.5 level on a daily closing basis, which is above the R3 Camarilla yearly pivot resistance. The next crucial resistance will be the R4 Camarilla yearly pivot, which comes around 20.6675. Both R3 & R4 act as reversal zones. In the worst case, if the VIX closes above 21, we might test the 34 levels also.
Indicator front: In the monthly Stochastics, India VIX has made a hidden bear divergence. Based on this analysis, one can expect India VIX to cool down from the 20-21 zone, at least in the short term.
Note: “Hidden Bear divergence” occurs when price makes a lower high (LH), but the oscillator (Stochastic, in this case ) is making a higher high (HH).
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Is it the time to have exposure to FMCG stocks?
The Nifty FMCG index presents an optimistic outlook, having demonstrated a nearly 10 percent increase from its recent peak of approximately 58,000. This ascent is particularly notable, given its establishment of a sturdy foundation above the 200-DEMA, as seen in the chart.
Moreover, after a period of consolidation spanning three months within the range of 53,000-55,000, the index has seen a breakout and has maintained its position comfortably above this range.
From a technical standpoint, the target for the FMCG index is estimated to be in the vicinity of 58,000-59,000. This projection suggests a continuation of the upward trend and indicates potential gains for the index, bolstered by its recent breakout and sustained performance.
Do you expect Bull Run to continue in Nifty Metal index?
From a technical perspective, investors and traders are advised to consider booking partial profits at this juncture. This recommendation stems from the recognition that both the R3 and R4 Camarilla yearly pivot levels serve as significant reversal zones, indicating a potential shift in market sentiment and direction.
Moreover, recent candlestick patterns over the past two weeks have raised concerns. Specifically, the emergence of negative candlestick formations, such as a Doji, followed by Bearish Engulfing candle, occurring precisely near the R4 Camarilla yearly pivot, underscores the significance of this resistance level.
These patterns suggest indecision, followed by a strong bearish momentum, signaling potential downward pressure on the market. So, it will be prudent to consider securing partial profits to mitigate the risks and adapt to the evolving market conditions.
Do you see the Hero MotoCorp continuing uptrend for coming weeks or is it looking overbought now?
The recent breakout in the stock holds promise, particularly due to its confluence with key technical factors. Firstly, the reversal from the middle Bollinger band signals a significant shift in momentum. This suggests that after a period of consolidation or sideways movement, the stock has gained upward traction, indicating potential bullish sentiment among investors.
Moreover, the stock has surpassed its previous high of Rs 4,843, a crucial resistance level, and is, at present, maintaining its position comfortably above it. This breakout above the previous high not only validates the upward momentum but also serves as a confirmation of bullish strength in the stock. Additionally, considering the technical indicators, there is a possibility that Hero MotoCorp's stock could test the Rs 5,000 level in the current week.
What is your Nifty and Bank Nifty trading strategy for the current week?
Currently, the prudent approach is to wait and watch. This cautious stance implies refraining from taking significant positions until certain conditions are met. Specifically, in the case of Nifty, a decision to initiate a long position will only be considered if the index closes above the 22,150 level on a daily basis. This threshold represents a critical point of confirmation for a bullish momentum.
Similarly, for Bank Nifty, a long position will only be favoured if the index closes above the 47,800 mark on a daily basis. These levels serve as key indicators for traders, suggesting a potential shift in market sentiment and providing confirmation of sustained upward momentum.
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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