Chartist Talks: Nifty retesting June 2024 low can't be ruled out, pick Infosys, says Ashish Kyal

Ashish Kyal is the Founder and CEO of Waves Strategy Advisors

"Low formed during event months are crucial. In June 2024, prices formed a low near 21,280 and retest of the same cannot be ruled out," Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors said in an interview to Moneycontrol.

According to him, short to medium term outlook for Nifty is bearish as long as the Nifty does not close back above prior weekly high which is now at 24,090 levels.

Among stocks, "I will avoid buying BSE unless I see stability in major index, but will buy Infosys," said Ashish Kyal who has more than two decades of experience in the capital markets.

Portfolios are bleeding. Do you see the Nifty 50 hitting June lows soon before staging a sharp recovery?

Nifty after forming a top near 26,277 in September 2024 has been moving lower. The correction started in September and on weekly time frame has a clear lower highs and lower lows formation. This has turned the overall medium term trend on sell side as per classical Dow theory technique. Nifty by breaking below the prior weekly low of 23,263 has given this negative confirmation. Prices have also broken the multi-month trendline support since 2023. So, overall trend has turned negative for move to 22,500 and lower levels.

Low formed during event months are crucial. In June 2024, prices formed a low near 21,280 and retest of the same cannot be ruled out. In a nutshell, short to medium term outlook for Nifty is bearish as long as we do not close back above prior weekly high which is now at 24,090 levels.

Do you think the Bank Nifty will also break June lows, given the negativity in all technical indicators?

Bank Nifty has closed in red since January 3, 2025 and has protected its prior day’s high since then suggesting that bears have tighten its grip with each passing day. Bank Nifty also broke of the topping Head and shoulders pattern. Target as per the pattern comes near 45,900 which is near June low which was 46,077. So fall towards the same is expected. The above view will be invalid if Index breaks 49,800 on closing basis.

Are you a big buyer in BSE?

The stock is currently witnessing profit booking as the stock witnessed a steep rise of nearly 30% in December 2024. We can expect profit booking to continue towards major support area of Rs 4,950 levels. A breach below Rs 4,950 will be sight of concern. On the upside a daily close above Rs 5,250 level can reinforce positive momentum in the stock. I will avoid buying BSE unless I see stability in major index.

Do you see TCS climbing towards its record high soon?

IT sector is sustaining at higher levels despite of selling seen in broader market is a sign of relative outperformance. Wherein, TCS has a major contribution for the Index stabilization. In the previous week, the stock bounced from the major support area of Rs 4,020 levels and showed rise of more than 7% in just 3 trading sessions. If TCS manages to sustain above Rs 4,490 on closing basis then we can expect sock to make fresh highs to Rs 4,590 levels. On the downside Rs 4,160 is nearest support.

Which two stocks are on your buying list during the current market correction?

Vijaya Diagnostic Centre

Vijaya Diagnostics is trading at fresh record highs and continued to protect previous day’s low on a closing basis despite major indices falling which keeps overall on the positive side unless we see a close below prior day’s low. For now, a break above Rs 1,280 is must for bullish momentum to continue in this stock with the targets of Rs 1,420 or higher. On the downside, Rs 1,190 is the crucial support level.

Infosys

IT sector managed to sustain near high levels which is one of the reasons to pick stock from the sector. Wherein, Infosys is under formation of inverted Head and Shoulders pattern on the daily chart. A close above Rs 2,010 will confirm breakout of the said pattern which will open doors for the targets of Rs 2,200-2,220 levels. The above view is valid as long as Rs 1,880 levels remains protected on the downside.

Are the Midcap and Smallcap indices looking oversold? Do you see a bounce-back soon?

Overall sentiments for Midcap and Smallcap indices continued to remain on the sell side. However, daily RSI is near oversold zone so possibility of sudden pullbacks cannot be ruled out which can act as an opportunity to sell as overall outlook is still bearish. On the upside, 55,700 (Midcap) and 18,120 (Smallcap) are the nearest resistance levels. A breach above it will be a first sign of trend change. But as long as these levels are intact trend will be on sell side for these indices.