We believe time correction could keep midcaps sideways and any decline for the midcap index near to the support of 16,100 levels would be a good opportunity to add longs, Rajeev Srivastava, Chief Business Officer at Reliance Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) A volatile week for Indian markets as Nifty retested support at 11200 and then bounced back. What led to the price action on D-Street in the week gone by?
A) The Nifty50 tested the medium-term 50-Days average support line and then bounced back to close 1.2 percent higher for the week.
The strong up move was led by Energy and IT sectors while interest rate-sensitive sectors like Banks, Realty, and Auto declined by 2.3%, 2.5%, and 0.5% respectively for the week.
The Nifty Metals declined by 2.7 percent as the dollar index retraced from the lower levels putting pressure on commodities prices.
The positive news flow of Reliance Industries stake sale in its retail venture and adjournment of the Supreme Court hearing on interest moratorium witnessed positive momentum.
Q) What is your call on markets for the coming week? Which are the important technical levels that one can track?
A) We believe Nifty50 has good support near 11,100-11,200 levels which is the 50-Day average and a crossover of 11,600 levels on the higher side would turn the monthly expiry candle positive.
The stand-off between India-China disengaging troops at the border has eased the tension on the geopolitical front but the recent spike in COVID continues to remain a concern going ahead.
Q) A mixed performance was seen from the Small & Midcap space in the week gone by. Small-cap stocks got some momentum going while midcaps recorded some profit-taking. What is your view on the broader markets?
A) We expect the markets to consolidate at current levels in the range of 11,200-11,700 levels over the next few weeks. The Nifty Midcap 100 index has resistance near its 200-week and 21-months average.
We believe time correction could keep them sideways and any decline for the midcap index near to the support of 16,100 levels would be a good opportunity to add longs.
Q) Sectorally, the action was seen in Energy, Oil as well as IT index while on the downside Telecom and Realty took a hit. What led to the price action on different sectors?
A) Reliance Industries lead the up move in the Energy sector followed by oil marketing companies as crude prices corrected sharply by 10 percent over the last one week.
IT sector continues to remain an outperformer trading at all-time high levels and we continue to remain positive on the sector.
Telecom stocks took a hit as the expected price hikes in tariff did not come through and led to some unwinding of longs post the AGR verdict.
Q) Any 3-5 trading ideas for the next 3-4 weeks?
A) Here is a list of the top three stocks that could give 11-14% return in the next 3-4 weeks:
HUL: Buy| LTP: Rs 2159| Target: Rs 2400| Stop Loss: Rs 1965 | Upside: +11.1%
The stock has closed near its long-term support zone and has witnessed positive pullbacks from the current levels on various counts.
The daily RSI is trading below 50 levels indicating a bullish set up for the stock having an upper hand.
This could bring the stock to test the intermediate-high which could be the potential target over the next few months.
SIEMENS: Buy| LTP: Rs 1225 | Target: Rs 1340 | Stop Loss: Rs 1140 | Upside: +14.9%
The stock remained sideways after a sharp decline and its key technical indicators on the short-term timeframe have reversed from their oversold zone and given a buy signal.
On the lower side, its prior low connecting support line and its 100-month SMA worked as a key reversal point.
We believe that the stock will utilize prior consolidation and will resume its up-move that could lead the stock towards Rs 1340 levels.
IGL: Buy| LTP: 403| Target: Rs 455| Stop Loss: Rs 375 | Upside: +13.2%
The stock formed a double bottom at sub-385 levels with strong volumes and has crossed its 50-Day average confirming an up move.
Its Relative Strength Index has crossed upwards from its lower band of averages and we expect the stock to outperform from current levels.
The stock has completed its price and time-wise consolidation after a sharp down move from the highs of 534 levels.
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