CLSA's Laurence Balanco sees another 5% cut on Nifty by November

Laurence Balanco is advicing investors to 'Accumulate' HDFC Bank now, and said if the stock sustains above Rs 1,730, then it can head to Rs 2,500 levels.

CLSA's top chartist Laurence Balanco believes there may more downside on the index level, and a further 5% correction may come very soon as Nifty 50 threatens to test key levels on the downside.

In a conversation with CNBC-TV18 on October 23, Balanco adviced caution, saying he sees further correction in Nifty which could take the index to the long-term support level of 23,389 very soon. Nifty50 is currently in the range of 24,400-24,500, having fallen 6%, or about 1,500 points in the last one month.

Balanco's reading of the chart suggests that Nifty 50 may test this level in the next 20 trading sessions, likely in November, he added. This level also happens to be the lower end of the uptrend channel traced from the 2023 lows.

Nifty50 last tested the 200-DMA during the reaction to the 2024 General Election verdict, and then earlier in March 2023. "Nifty has tested the 200-DMA only on two occasions in the last 18 months, and this could be the third," said Balanco.

In this fall, he sees PSU space at the greatest risk of cuts, with the BSE PSU having already gone below the 200-DMA after showing weakess since June this year. "This space is leading the downside," Balanco added.

More specifically, Balanco highlights that the PSU banks had started to roll over since the start of the year, after having outperformed from the Covid-19 lows. "The PSBs were great outperformers since the Covid lows but since the start of the year they have started to roll over."

Laurence Balanco is advicing investors to 'Accumulate' HDFC Bank now, and said if the stock sustains above Rs 1,730, then it can head to Rs 2,500 levels.

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