The Nifty is now approaching the crucial resistance at the upper end of the channel placed between 14,950-15,000 levels, and a sustained trade beyond this trendline resistance may extend the upward journey taking the Index higher to levels of 15,200-15,450, Aditya Agarwala, Senior Technical Analyst, YES SECURITIES said in an interview with Moneycontrol’s Kshitij Anand.
Q) A volatile week but bulls remained in control of D-Street pushing Nifty50 above 14800 levels. What led to the price action despite the count of daily cases exceeding 4 lakh mark?
A) Bulls took control of the D-Street in the week gone by pushing the Nifty-50 beyond its crucial short-term moving averages i.e. 20-DMA & 50-DMA placed at 14,600-14,730 respectively.
Moreover, despite the sharp rising Covid-19 cases in India markets are looking forward and discounting the negative impact of it, as the halt in the business activity looks temporary with the start of vaccination for the 18+ population.
Further, a pick-up the pace of vaccination may limit the fast spread of the virus resulting in flattening of the curve sooner and resumption of the business activity.
Q) How do you see markets in the coming week? Which are the important levels that one should track going forward taking view of the FII and DII activity.
A) Indian benchmark Index Nifty-50 after a decent show in the week gone by is now approaching the crucial resistance at the upper end of the channel placed between 14,950-15,000 levels, and a sustained trade beyond this trendline resistance may extend the upward journey taking the Index higher to levels of 15,200-15,450.
On the flip side failure to keep its neck above 15,000 levels may invite bears to pull the Index back to its 50-DMA & 20-DMA support line placed at 14,730 & 14,600 levels respectively.
Technical indicator +DI crossing -DI and RSI turning upwards suggest intermediate bullishness is intact; however, it will be important to watch if the Index sustains above 15,000 levels for an extended rally.
Q) Sectorally, the metal index outperformed for yet another month while Consumer durable was the laggard. What led to the price action?
A) Metal Index extends its outperformance as commodity prices continue its supercycle following up with good quarterly results.
Further, the Nifty Metal index is now approaching its all-time high level of 5,494 made in Jan’2008; a breakout into uncharted territory could fuel more rally in the metal stocks.
However, some of the metal stocks are sitting at an extreme overbought territory, therefore minor profit booking cannot be ruled out before they resume their uptrend.
Consumer durable demand has clearly taken a hit due to the lockdown in several states limiting the movement of goods which can be seen in the way the stocks have underperformed.
Q) After a flat April, ‘Sell in May Go Away’ echoes in the mind of investors. History suggests that bulls have mostly remained in control. Do you think May of 2021 will be different?
A) “Sell in May and Go Away” has become an overrated phrase, rather data suggests that there have more instances of Indian markets ending the trade in the green in the month of May than in the red. Moreover, following two months of high volatile period, the May month may just witness benchmark Indices remain range-bound.
Q) 13 stocks on BSE hit a fresh All-Time High that includess names like Apollo Hosp, Adani Transport, JSW Energy, Prince Pipes, and Tata Steel. Do you think these could be the momentum bets at least in the short term?
A) All the 5 stocks are sitting at an extremely overbought zone following the recent outperformance and the risk to reward ratio is now skewed to consider taking short-term long bets on these names.
However, if one wants to pick few stocks within these names Apollo Hospitals and Prince Pipes can be considered. Apollo Hospitals above 3420 can test levels of 3600-3650. Prince Pipes can test levels of 640-660 in the near term.
Q) You top 3-5 trading ideas for the next 3-4 weeks
A) Here is a list of stocks:
State Bank of India: Buy| LTP: Rs 358| Target: Rs 390| Stop Loss: Rs 340| Upside 9%
The stock is on the verge of a breakout from a sideways consolidation phase, a sustained trade beyond 360 will resume the uptrend taking it higher to 390.
Further, it has taken support at the 20-DMA constantly confirming strength in the stock. RSI has turned upward from the levels of 50 suggesting bullishness.
Dhanuka Agritech Ltd: Buy| LTP: Rs 801| Target: Rs 900| Stop Loss: Rs 750| Upside 12%
The stock has resumed its upward journey after breaking out of a channel pattern consolidation phase, backed by good volumes.
Further, the 20-DMA has made a bullish crossover with 200-DMA which confirms the bullishness. Moreover, RSI has also turned upwards from the lower end of the bull zone i.e. 40 a sign of strength.
Kaveri Seed Company: Buy| LTP: Rs 639| Target: Rs 740| Stop Loss: Rs 580| Upside 15%
The stock has resumed its upward journey after taking support at the 50 Fibonacci retracement levels. Moreover, volumes have picked up in the recent upmove confirming bullishness. RSI has also turned upwards from the level of 40 suggesting bullishness.
Torrent Power: Buy| LTP: Rs 416| Target: Rs 475| Stop Loss: Rs 380| Upside 14%
The stock has resumed its upward journey after taking support at the recent trendline breakout support placed at 380 levels.
Moreover, it also happened to be the key short-term moving average support confirming bullishness. RSI has also turned upwards from the level of 60 indicates a strong uptrend dominance in the stock.
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