Technically, as long as the Nifty 50 is trading above the psychological 24,000 mark, the index is likely to continue its upward journey towards 24,600, and then 24,850 in the short term, Sudeep Shah of SBI Securities said in an interview with Moneycontrol.
Further, given the overall trend is bullish, he recommends traders stay with the trend and be buyers on minor dips.
According to him, the IT, pharma, railways, and defense sectors will be in focus, so one should keep an eye on these segments.
One can buy IRFC and Texmaco Rail & Engineering for the target of Rs 200 and Rs 300, respectively in the short term, said the Deputy Vice-President and Head of the Technical and Derivative Research desk at SBI Securities, who has more than 15 years of experience in the technical research.
Do you feel the Nifty could surpass and sustain above 24,500?
We do not feel Nifty is getting exhausted at higher levels. During the past couple of trading sessions, the continuous sector rotation helped the market sustain as well as move even higher. In the current week ended July 5, IT, pharma, railways, defense, private banks, and oil & gas sectors have all contributed to pushing the market higher. Hence, taking the sector rotation into consideration, the current market appears to be one where trailing stop-losses are more relevant than setting specific targets.
Technically, for the second consecutive week, Nifty has ended on a positive note. It has formed a sizeable bullish candle on a weekly scale, which is a bullish sign. The momentum indicators and oscillators also support the overall bullish chart structure.
Talking about levels, the support zone is shifted higher in the zone of 24,050-24,000 level. As long as the index is trading above the psychological level of 24,000, it is likely to continue its upward journey and test the level of 24,600, followed by 24,850 in the short term. On the downside, if the index slips below the level of 24,000, then the next support is placed in the zone of 23,800-23,750 levels.
Any strategy for Nifty 50 traders?
Since the overall trend is bullish, we recommend traders stay with the trend and be buyers on minor dips.
Your outlook on the Bank Nifty for the coming week?
During the last week, the banking benchmark index, Bank Nifty, has underperformed frontline indices. However, it has managed to mark a fresh all-time high. After the sharp upside rally in the last couple of weeks, the index has slid into a period of consolidation. Since the last 8 trading sessions, it has been oscillating in the range of 53,357-51,997 zone.
Technically, the major trend of the index remains bullish as it is trading above its short and long-term moving averages. These averages are in a rising trajectory, and they are in the desired sequence, which suggests the trend is strong. The daily and weekly RSI (Relative Strength Index) is in a super bullish zone.
Going forward, any sustainable move above the level of 53,400 will lead to a sharp upside rally up to the level of 54,000, followed by 54,500 in the short term. On the downside, the zone of 52,000-51,900 is likely to provide the cushion in case of any immediate decline as it is the confluence of the recent swing low and 13-day EMA level.
Among the constituents of Bank Nifty, ICICI Bank, Axis Bank, and Federal Bank are in a better position on higher as well as lower time frame.
Your take on the midcap and small-cap space for the coming week?
In line with our expectations, the Nifty Midcap 100 and Nifty Smallcap 100 strongly outperformed frontline indices, and both have marked fresh all-time highs. For the fifth consecutive week, Nifty Midcap 100 and Nifty Smallcap 100 ended on a positive note. They both have formed sizeable bullish candles on a weekly scale. As they are trading at all-time high levels, all the moving averages and momentum-based indicators suggest strong bullish momentum in the index.
Talking about levels, for the Nifty Midcap 100, the zone of 56,500-56,400 is likely to act as strong support for the index. As long as the index is trading above 56,400, it is likely to continue its upward journey and test the level of 57,800, followed by 58,300 in the short term.
The Nifty Smallcap 100 is likely to continue its northward journey and test the level of 19,300, followed by 19,500 in the short term. On the downside, the support has shifted higher in the zone of 18,700-18,650 in the short term.
Sectors that will outperform in the short term?
Nifty Pharma: In line with our expectations, Nifty Pharma has strongly outperformed in the last week. We believe it is likely to continue its upward journey as during the last week, it has given a horizontal trendline breakout. It is likely to test the level of 20,700, followed by the psychological level of 21,000 mark in the short term. On the downside, the zone of 20,100-20,000 is likely to provide a cushion in case of any immediate decline.
Nifty IT: Since the last couple of weeks, Nifty IT has been outperforming the frontline indices. The ratio chart of Nifty IT as compared to Nifty is at an 11-week high, which is a bullish sign. Going forward, it is likely to test its prior swing high of 38,559, which was registered in February 2024. Any sustainable move above the level of 38,559 will lead to a fresh upside rally in the index. On the downside, the zone of 37,200-37,100 will act as immediate support.
Railways and Defense: Stocks from the Railways and Defense space have witnessed strong bullish momentum along with robust volume in the last week. We believe they are also likely to continue their outperformance in the next couple of trading sessions. However, we recommend following the strict trailing stop-loss in both these sectors.
Nifty Auto and Nifty Metal: Due to the consolidation since the last couple of trading sessions, the Bollinger band has narrowed significantly. In technical parlance, it is known as Bollinger Band Squeeze. It occurs when the volatility falls to low levels and the band narrows. A volatility contraction or narrowing of the bands can foreshadow a significant advance or decline. Hence, we expect a trending move in both these sectors in the next couple of trading sessions.
Nifty Oil & Gas: On a daily scale, it has given horizontal trendline breakout. The daily RSI (Relative Strength Index) has sustained above 60 levels, and it is in a rising trajectory. Hence, we believe it is likely to continue its northward journey and test the level of 12,800, followed by 13,000 levels in the short term. On the downside, the zone of 12,200-12,150 will act as immediate support for the index.
With a fresh move in railway space, what are your top 2 picks?
Indian Railway and Finance Corporation (IRFC)
It has given a 20-day consolidation breakout on a daily scale. This breakout is confirmed by robust volume. In addition, it has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The momentum indicators and oscillators also support the overall bullish chart structure. Hence, we recommend accumulating the stock in the zone of Rs 189-187 level with a stop-loss of Rs 180. On the upside, it is likely to test the level of Rs 200, followed by Rs 210 in the short term.
The stock has been witnessing strong bullish momentum along with robust volume since the last couple of trading sessions. As the stock is trading at an all-time high level, 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 274-272 level with the stop-loss of Rs 262. On the upside, it is likely to test the level of Rs 290, followed by Rs 300 in the short term.
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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