Since the last 8 eight trading sessions, the Nifty 50 has ended on a negative note, which was its longest losing streak since February 2023. This resulted in the formation of the Record Session Count candlestick pattern, which indicates the market may take a breather for now, said Sudeep Shah of SBI Securities in an interview to Moneycontrol.
This is an extremely rare pattern and usually occurs at the bottom of a downtrend.
Among stocks for next week, he is bullish on Bharti Airtel and Redington. "Both have been strongly outperforming the frontline indices,"said the Deputy Vice President and Head of Technical and Derivative Research at SBI Securities.
Do you think the market seems to be bottoming out, or will the correction drag the index down to 22,000 first before getting into leg of uptrend?
In the past week (ended February 14), the benchmark index Nifty experienced a sharp decline of 2.7%, reflecting the ongoing weakness in the market. However, the real damage was evident in the broader market, where the Nifty Midcap 100 and Nifty Smallcap 100 indices witnessed significant corrections, plunging by 7.38% and 9.41%, respectively.
Looking at the bigger picture, the extent of the downturn becomes even more pronounced. From its all-time high, Nifty has now declined by approximately 13%, while the Nifty Midcap 100 has shed 18.49%. The Nifty Small Cap 100 index has taken the worst hit, sinking nearly 22% from its peak. This steep fall highlights that the broader market is facing the highest level of selling pressure, with mid and small-cap stocks bearing the brunt of the correction.
Coming back to Nifty, since the last 8 eight trading sessions, the index has ended on a negative note, which was its longest losing streak since February 2023. This resulted into the formation of the Record Session Count candlestick pattern, which indicates the market may take a breather for now. This is an extremely rare pattern and usually occurs at the bottom of a downtrend. Generally, we rely on the typical momentum indicators or oscillators for recognising an overbought and oversold condition of the stock. However, this Japanese candlestick pattern gives us a unique way to recognise the time when the momentum is about to wane out.
However, confirmation through price action is essential before drawing any conclusions about a potential reversal. Talking about crucial levels, the zone of 22,700-22,650 will act as immediate support for the index as the prior swing low and trendline support are placed in that region. On the upside, the 23,200-23,250 will act as a crucial hurdle for the index. If the index sustains above 23,250, then we may witness a sharp pullback rally upto the 23,600 level.
Do you foresee Bank Nifty easily breaking January low soon?
The Banking benchmark index Bank Nifty has been outperforming the frontline indices since the last couple of trading sessions. The Bank Nifty’s heavyweight stocks like HDFC Bank, ICICI Bank, and Kotak Mahindra Bank are demonstrating strong resilience and outperformance compared to the broader market, despite the sharp correction seen in recent sessions. While the frontline indices have faced significant pressure, these banking giants have managed to hold firm, showcasing their relative strength.
From a technical perspective, all three stocks are trading above their medium-term moving averages, indicating sustained bullish momentum. This strength suggests that they could play a crucial role in helping the index stabilise at current levels.
Going ahead, the zone of 48,700-48,600 is likely to act as a crucial support for the index, while on the upside, the zone of 49,800-49,900 will act as an immediate hurdle for the index. If the index sustains above the level of 49,900, then we may witness a sharp upside rally upto the level of 50,600 in the short term.
What are your top 2 picks for next week?
The stock of Bharti Airtel has been strongly outperforming the frontline indices. The ratio chart of the stock as compared to the Nifty index is at 184-months high. The Mansfield’s Relative Strength indicator is quoting above zero line since last 278 trading sessions, reinforcing the stock’s consistent strength. Currently, stock is trading just a stone’s throw away from its all-time high. All the moving averages and momentum-based indicators are suggesting strong bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 1,720-1,710 level with the stop-loss of Rs 1,660. On the upside, it is likely to test the level of Rs 1,850 in the short term.
The stock of Redington has been strongly outperforming the frontline indices since the last couple of trading sessions. It is marking the sequence of higher tops and higher bottoms along with the robust volume. Also, it is trading above its short and long-term moving averages. The momentum indicators and oscillators are also portraying a bullish picture. Hence, we recommend accumulating the stock in the zone of Rs 246-244 level with the stop-loss of Rs 235 level. On the upside, it is likely to test the level of Rs 265, followed by Rs 280 in the short term.
Do you expect Jubilant Foodworks to be getting ready for a sharp rally?
Recently, the stock has taken support near its prior swing low, and it coincides with its 200-day EMA (Exponential Moving Average) level. Currently, the momentum indicators are suggesting consolidation for now. We believe the zone of Rs 700-710 will be the crucial hurdle for the stock. A sustained move above Rs 710 could trigger a sharp upside rally, but until then, significant upside momentum is unlikely.
Are you super bullish on Godfrey Phillips?
Yes, the stock is marking the sequence of higher tops and higher bottoms along with the robust volume. Also, it is strongly outperforming the frontline indices, and it is trading above its short and long-term moving averages. These averages started edging higher. Further, the daily RSI (Relative Strength Index) is in bullish territory, and it is in a rising mode. Hence, we believe it is likely to continue its northward journey and test the level of Rs 6,800 in the short term.
Do you advise buying Infosys at these levels as it still traded well above the support trendline?
Infosys has been outperforming frontline indices, holding above its upward-sloping trendline and 200-day EMA. Additionally, its ratio chart against Nifty is forming higher tops and higher bottoms. However, with momentum indicators signaling sideways movement, we recommend buying only above Rs 1,890 for better confirmation of strength.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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