Last week, due to the mid-week sell-off, Nifty entered sub-14,300 territory for the first time since the Budget 2021.
However, on March 26 market showed a decent recovery across the board and Nifty reclaimed 14,500 on a weekly closing basis.
We continue to remain cautious and the way the charts appear, further correction cannot be ruled out.
As far as levels are concerned, the next key support is in the zone of 14,140 – 14,000 as it coincides with the daily '89 EMA (exponential moving average)’ and the 78.6 percent retracement of the up move from 13,596.75 to a record high of 15,431.75.
Before this, 14,400–14,250 are immediate supports.
On the upside, the cluster of resistances is visible at every 100-150 points. So, for this week, 14,600 – 14,750 – 14,900 are points of pain for the Nifty.
Till the time 14,900 is not surpassed convincingly, the short-term trend remains bearish and hence, it is better not to get complacent.
The placement of the banking index is a tricky point. It has already corrected in line with our expectations and has underperformed our benchmark significantly in the recent past.
This space saw a massive recovery in the latter half on March 25 after precisely testing the '89-EMA’ level of 32,420.
This level coincides with the previous breakout point on the Budget day. Hence, it would be really interesting to see how it behaves going forward.
If it fails to show any strength here, we should then gear up for an extended correction.
In the bull-case scenario, it is located just at the right junction from where it can take a U-turn.
Let’s see how things pan out because other sectors have also started participating in the correction and the broader market, which had been convincingly outperforming, has now started to see some decent profit-taking.
Here are two buy and one sell calls for the next 2-3 weeks:
Asian Paints | Buy | LTP: Rs 2,498 | Target price: Rs 2,610 | Stop loss: Rs 2,458 | Upside: 4.5%
Paint stocks had a quiet period for a couple of months. We have witnessed a decent price and time-wise correction in most of those counters.
Asian Paints, being the giant in this space, has always been a rank outperformer over the years.
On March 26, we witnessed the first sign of strength after a while as the stock managed to come out of its recent congestion phase.
The stock corrected after a good trended move and then went into a consolidation mode.
Finally, it seems to have completed its corrective move and looks poised for the resumption of the uptrend.
We recommend going long on dips for the target of Rs 2,580 – Rs 2,610 in the coming days.
JSW Energy | Buy | LTP: Rs 88 | Target price: Rs 93 | Stop loss: Rs 83.20 | Upside: 6%
Since March 2020, this stock has been maintaining its sturdy structure and we can see a series of higher highs, higher lows on all timeframe charts.
It is interesting to see that despite a lot of stocks from the broader market going through some price-correction in the last few days, this stock chose to move sideways.
Now due to last Friday’s move, a breakout from the small triangle is visible on the daily chart.
It is accompanied by a decent rise in volumes and hence, we expect the stock to do well in the next few days.
Hindalco Industries futures | Sell | LTP: Rs 326.45 | Target price: Rs 314 | Stop loss: Rs 332 | Downside: 4%
Hindalco managed to sneak below its ‘20-day EMA’ for the first time after nearly two months.
Although the entire metal pack has managed to rebound sharply in the last couple of days, we are taking a trading punt on the short side looking at the bearish crossover of 5 and 20-EMA on the daily chart and prices retesting it last Friday.
On the hourly chart, prices are trading below ‘200-SMA’ which we believe is likely to act as a hurdle.
Hence, purely with a trading view, we recommend going short against the major trend for a target of Rs 314 in the coming days.
(The author is Chief Technical & Derivatives Analyst at Angel Broking)
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