"For March to be a blockbuster month, we need participation from banking stocks. On the Nifty, support is seen at the 21,850 level and, as long as the same is intact, the undertone can be buy on dips," Ashish Kyal, CMT, founder and CEO of Waves Strategy Advisors, says in an interview to Moneycontrol.
On the auto space, momentum is strong and best to use dips to enter into the medium-to-long-term uptrend in this sector, he feels.
Kyal, with more than two decades of experience in capital markets, says he is optimistic that the Nifty IT index will cross to lifetime high of 39,500 soon. Excerpts from the interview:
Do you expect the Nifty to close above 22,500 in monthly F&O expiry week? And, does March appear to be another strong month for the market?
The Nifty on weekly time frame formed a low near 21,137 on January 24, 2024 and since then prices have managed to protect the prior weekly lows on a closing basis. This keeps the overall tone positive. However, this time the momentum is slower, compared to prior rise.
As of now, the undertone remains bullish but we need to close above the 22,300 levels which will confirm a move to the 22,500 level. March 2024 can be a volatile month. Overall participation is possible from the IT and pharma sector but Bank Nifty is still not showing strong recovery.
For March to be a blockbuster month, we need participation from banking stocks. On the Nifty, support is at 2,1850 levels and as long as same is intact undertone can be buy on dips.
Do you expect more downtrend in PNB Housing Finance after reading the chart patterns?
PNB Housing Finance formed a top near Rs 840 levels on February 12, 2024 and since then there is not a single close above the prior daily candle high. This is a simple way to follow the trend unless we see a close above the prior candle high which is now at the Rs 730 levels.
The prior price action support for this stock is near Rs 685. So, there is a possibility for a move to that level before we see a strong rebound with the upside hurdle at Rs 730 levels. Use pullback to sell for target of Rs 685.
Do you think Yes Bank is a good buy at current levels?
Yes Bank has a tendency to show a sharp rise and then it again comes back to the level from where it started moving up. We can see a strong bullish candle was formed for a move from Rs 23 to Rs 32.90 levels and prices started falling and now back to Rs 26.20.
It is best to avoid such volatile stocks from the buying perspective. Over the short term, a break above Rs 27.50 is required for a pullback to Rs 29 levels. As long as Rs 27.50 is intact, we can expect a move back to Rs 24.50.
Does the Nifty Auto index look overbought at current levels?
Nifty Auto had been one of the strongest sectors that we have seen after Covid. The index itself has risen by 350 percent from the Covid lows made in March 2020. Short-term indicators are overbought but it is best to avoid catching a top and use any dips as an opportunity to enter into the auto stocks.
We can see outperformance from not only auto stocks but auto ancillary stocks are also doing well. In a nutshell, momentum is strong and best to use dips to enter the medium to long term uptrend in this sector.
Are the charts telling you that the Nifty Bank is marching towards its record high after recent consolidation?
Bank Nifty has underperformed the Nifty over the past many weeks. The Nifty is touching lifetime highs but Bank Nifty is still nearly 4 percent below its lifetime high levels. If this index manages to sustain above 47,200 levels, then we can expect a stronger upside move 47,800 levels but crossing to lifetime highs over short term will not be easy unless private sector banks start showing strong momentum. Immediate support is at 46,300 for this index.
Do you believe the Nifty IT will surpass its previous record high in coming weeks?
Nifty IT index was near Rs 30,200 levels when we first discussed about bullish outlook on this index in the interview. From there the index has now moved to the levels of 38,000 which is more than 25 percent rally in short span of time. Even now there is not tiring sign and I am optimistic that the index will cross to lifetime high levels near Rs 39,500 levels soon!
Considering the charts, are you bullish on Nvidia Corporation (Nasdaq listed)?
Nvidia stock has shown near vertical rise post its result declaration. Stock rose by more than 18 percent in just two days and more than 65 percent in just 7 weeks. The up move looks stretched but there are no signs of reversal. We can expect short term consolidation in this stock which will be a healthy sign.
Follow Ashish Kyal on Twitter - @kyalashish
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