The technical chart pattern of the Indian markets and some of the key global markets indicates a possibility of stiff resistance near the recent all-time highs, said Nagaraj Shetti, Technical analyst, HDFC Securities in an interview with Moneycontrol’s Kshitij Anand. Q) The Indian market closes the week with gains of over 1 percent, and well above the 12,000 levels. Do you think the week macro data could spoil the party for the bulls?
A) The Nifty has been in a mild but sustained uptrend since the past many weeks despite weak macros and the developments in the US-China trade tiff. The economic stimulus measures have helped the Nifty50 to gain some momentum.
Technically, the near-term trend of the Nifty remains weak, until it shows a decisive up move above 12,160-12,200 levels.
The present upside bounce from 11,850 levels could be viewed as a trading bounce. Hence, the weak macro data is likely to weigh on the upside momentum of the market.
Q) Do you think we could see a Santa Claus rally, probably towards the close of the year 2019?
A) Historically, the markets around the globe have shown a lack of momentum during mid to later part of December due to year-end considerations/holiday mood.
The present upside momentum in the market could continue to 12,150-12,200 levels until the end of this month. The emergence of selling pressure from around the all-time highs can’t be ruled out.
Q) The recent macro indicators stoke fears of a slowdown. Do you think investors could say goodbye to chances of a 25 bps rate cut in February?
A) The Nifty50 has maintained its sustainable uptrend status over the last few months despite negative macro indicators helped by a continuous rate cut by RBI in its policy meet (except the last meet when it unchanged rates.)
The technical chart pattern of the Indian markets, and some of the key global markets indicates a possibility of stiff resistance near the recent all-time highs. This could mean that no rate cut may happen in the February meeting of RBI MPC.
Q) Any big factors which investors should watch out for the coming week or important levels?
A) The higher levels of 12,150-12,200 could be strong overhead resistance for the Nifty for the next 1-2 weeks. There is a high possibility of an emergence of selling interest from those levels in the next few weeks.
Q) Any particular stock(s) which according to you are displaying signs of a breakout?
A) Here is a list of top two stocks which we think are displaying signs of a breakout and could give upto 11 percent return in the next 3-5 weeks:
NMDC Ltd: Buy| LTP: Rs 114.25| Target: Rs 127| Stop Loss: Rs 103| Upside 11 percent
The daily and weekly timeframe chart indicates a sustained upside in NMDC for the last couple of weeks. The stock price as per the weekly timeframe is now on the verge of an upside breakout from the key overhead resistance of around Rs 115-117.
This area has been a multi-month hurdle for the stock price for many months. The volume and oscillators are showing a positive outlook ahead.
Buying can be initiated in NMDC Ltd at CMP (Rs 114.25), add more on dips down to Rs 108, for the upside target of Rs 127 in the next 3-5 weeks. Place a stop loss of Rs 103.
Hindalco Industries Ltd: Buy| LTP: Rs 208.25| Target: 232| Stop Loss: Rs 191| Upside 11 percent
This metal stock has been moving in a larger consolidation pattern over the last few months. During this period the stock price has faced a key overhead resistance around Rs 206-207 levels and failed to sustain above it.
Recently, it moved above the resistance and showed an attempt to break out on the upside from this key hurdle. A sustained move above Rs 209-210 could open up renewed buying enthusiasm in the near term.
One may look to buy Hindalco at CMP at Rs 208.25, and add more on dips towards Rs 199, for the upside target of Rs 232 in the next 3-5 weeks. Place a stop loss of Rs 191.
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