The zone of 24,500-24,540 will act as strong support for the Nifty 50 as it is the confluence of the 20-day EMA level and the 50 percent Fibonacci retracement level of its prior upward rally (24,074-25,078), Sudeep Shah of SBI Securities said in an interview to Moneycontrol.
According to him, if the index slips below the level of 24,500, then the next support is placed 24,350-25,300 zone. On the upside, the resistance has shifted lower in the zone of 24,900-24,950 level, said the Head of Technical and Derivative Research at SBI Securities.
Among stocks, the major trend of Dr Reddy's Laboratories is bullish as it is marking the sequence of higher tops and higher bottoms, while the momentum indicators and oscillators are suggesting strong bullish momentum in Info Edge, said Sudeep with more than 17 years of experience.
Do you expect the Nifty 50 to break its important support of 24,500?
During the last week, the benchmark index Nifty reached a new milestone by surpassing the 25,000 mark for the first time, marking a historic achievement in the market. However, on Thursday, the US market experienced a sharp selloff due to disappointing economic data, which overshadowed optimism about a potential interest rate cut by the Federal Reserve. This led to profit booking in our markets as well on Friday.
As a result, the benchmark index Nifty tumbled by over 360 points, ending the week at 24,717 level with a loss of 0.47 percent, breaking an eight-week winning streak. Along with this decline, Nifty retraced almost 38.2 percent of the Fibonacci retracement level (24,703) of its prior upward rally (24,074-25,078). Additionally, it slipped below its 5 & 8-day EMA (Exponential Moving Average) levels. The internal strength of the market has weakened significantly, with only 62 percent of the index constituents trading above their 20-day EMA level.
Further, a negative divergence was identified on the daily timeframe of the 14-period RSI (Relative Strength Index). A negative divergence occurs when the price makes a higher high while the RSI forms a lower high. This suggests that traders should avoid building overleveraged positions and chasing prices.
Talking about levels, the zone of 24,500-24,540 will act as strong support for the index as it is the confluence of the 20-day EMA level and the 50 percent Fibonacci retracement level of its prior upward rally (24,074-25,078). If the index slips below the level of 24,500, then the next support is placed 24,350-25,300 zone. On the upside, the resistance has shifted lower in the zone of 24,900-24,950 level.
What is your view on Bank Nifty ? Do you expect the current consolidation to continue?
The lack of direction is clearly visible on the daily chart of Bank Nifty as during the week, it has oscillated in the zone of 52,340-51,087 levels and mostly formed indecisive candles. The momentum indicators and oscillators also portray a similar picture. The daily RSI has been in the sideways zone since the last 11 trading sessions as per RSI range shift rules. The trend strength indicator, ADX, (Average Directional Index) is currently quoting at 14.54 level, and it is in falling mode. This clearly shows a lack of direction on either side.
Going ahead, the 50-day EMA zone of 51,050-51,000 will act as immediate support for the index. If the index slips below the level of 51,000, then the next support is placed at 50,450-50,400 zone. On the upside, the zone of 51,900-52,000 will act as an immediate hurdle for the index. Any sustainable move above the level of 52,000 will lead to resume its northward journey.
Any specific outlook on the global markets' effect on the Indian indices?
As the famous statement goes, "When America sneezes, the world catches a cold." The disappointing economic data on Thursday, coupled with the job's report on Friday, has led to a sharp sell-off in the US markets in the last two days, especially the Nasdaq. Even though our markets have been largely insulated due to strong DII buying, we are bound to come under a bit of correction, taking into consideration the sharp run-up our markets have seen. Specific pockets of our markets are definitely overheated, which could witness a mean reversion. The internal strength of the markets has also weakened significantly, with only 62 percent of the index constituents trading above their 20-day EMA levels.
Which sector, according to you, could provide momentum to the markets in the coming week?
Technically, Nifty Pharma and Nifty Healthcare indices are likely to outperform in the short term.
Your top 2 bets?
The major trend of the stock is bullish as it is marking the sequence of higher tops and higher bottoms. Also, it is trading above its short and long-term moving averages. The daily RSI has been in a super bullish zone since the last 26 sessions. Hence, we recommend accumulating the stock in the zone of Rs 6,970-6,940 level with the stop-loss of Rs 6,740. On the upside, it is likely to test the level of Rs 7,300, followed by Rs 7,500 in the short term.
Info Edge (Naukri)
On Friday, the stock marked a fresh 52-week high along with robust volume. It has strongly outperformed frontline indices. The momentum indicators and oscillators suggest strong bullish momentum in the stock. Hence, we recommend accumulating the stock in the zone of Rs 7,330-7,300 level with a stop-loss of Rs 7,100. On the upside, it is likely to test the level of Rs 7,680, followed by Rs 7,830 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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