The Nifty 50 is likely to stay confined within its six-week trading band of 24,400 to 25,200 this week, according to Rahul Sharma, Director and Head of Technical & Derivative Research at JM Financial Services. He attributes this cautious stance to weakening market breadth, as he shared in a conversation with Moneycontrol. Here are the edited excerpts
Do you strongly believe the broad range of 24,400–25,200, set over the last six weeks, will be breached by the Nifty 50 in current week?
The Nifty 50 is expected to remain within its six-week trading range of 24,400-25,200 in the current week. While brief intraday moves above 25,200 are possible, a sustained breakout is not anticipated.
This cautious outlook is primarily due to weakening market breadth. The number of Nifty constituents trading below their 20-day Simple Moving Average has significantly increased:
April 28th: 4 stocks out of 50
May 15th: 9 stocks
May 26th: 11 stocks
Currently: 21 stocks
For a definitive close above 25,200, a broader improvement in market breadth is crucial.
Do you think the Bank Nifty is likely to break out of its consolidation phase to the upside soon?
The Bank Nifty is displaying greater relative strength compared to the Nifty 50, having already surpassed its September 26, 2024 high. However, after its recent robust rally, further consolidation is anticipated before a definitive breakout above the 57,050 level.
Technical charts reveal a negative divergence with the momentum indicator on the daily timeframe. This suggests that while the overall trend remains sideways to bullish, a period of consolidation over the next few sessions is likely. Key support levels to watch are 55,000 and 54,400.
Do the charts of Tata Consumer Products and Mahindra & Mahindra appear favourable for investment?
The chart looks favourable, with the price respecting the strong support zone of Rs 1,050-1,060. This level also coincides with its 200-day Exponential Moving Average (EMA) and the 50% retracement of its March-April rally. For a 3-6-month investment horizon, consider accumulating in tranches with a stop-loss at Rs 1,010, and further additions above Rs 1,135 levels.
This stock has broken out from its channel consolidation, making it suitable for accumulation on dips. However, a significant resistance zone exists between Rs 3,221-3,250, which the price has faced four times previously. A decisive close above this range could lead to new highs.
Are you betting on Aeroflex Industries?
While Aeroflex Industries has shown good movement with volumes recently, the current market price (CMP) may not be an ideal entry point, I will look for dips towards the Rs 179-185 range where will again check charts to consider accumulating for potential targets of Rs 210-230.
Does the Nifty IT index look strong on the charts?
The Nifty IT index appears strong on the charts, having formed a robust bullish technical pattern. Several stocks within the sector have also broken out above their resistance levels. The index has strong support at 37,650 and a critical support at 36,700. On the upside, the Nifty IT index could potentially test 40,000 and 40,500.
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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