The rollover has been very low this time in both Nifty and Bank Nifty. This indicates that market is light and can turn either way based on the way positions are built going ahead, Mehul Kothari, AVP – Technical Research at AnandRathi said in an interview with Moneycontrol’s Kshitij Anand.
Technically, we are of the opinion that unless and until Nifty50 does not close below 14,300 on a daily basis there is a possibility of life highs in the May series, he added.
Q) Sensex, Nifty bounced back sharply in the week gone by from lows to reclaim crucial resistance levels with strong gains. But then on Friday investors again booked profits. What led to the price action?
A) Well for quite some time we have been vocal about our bullish stance or not so very bearish stance on the markets. In the past few sessions, we saw the Nifty sneaked below the 14,300 mark but it failed to close there and displayed a remarkable victory to reclaim the 15000 mark.
Despite the rising cases of COVID in India, the recovery in the market was seen mainly due to partial lockdown. On Friday, there was some profit-taking as the index already rallied around 800 points in a very short span of time.
In addition, participants decided to stay away for a couple of days to gauge the COVID condition during the weekend and also to make sure that the state election results are out.
Q) What is your outlook for the May series looking at the rollover data, as well as Open interest etc.?
A) The rollover has been very low this time in both Nifty and Bank Nifty also the open interest in both is not significant. This indicates that markets are light and can turn either way based on the way positions are being built.
Technically, we are of the opinion that unless and until Nifty50 does not close below 14,300 on a daily basis there is a possibility of life highs in the May series.
Initial few sessions could be volatile based on the rising cases and distress but we hope that things start to settle by the middle of the series. On the levels, front 14300 – 15400 is the range which we are expecting.
With regards to the NIFTY BANK index, we are witnessing a golden cross of 50 & 200 DSMA. This could be highly positive for the coming weeks wherein even the NIFTY BANK index go towards lifetime highs.
Q) In terms of sectors, metals, banks led the rally in the week gone by. What is fuelling the price action in these sectors?
A) Metals have been an outperformer for the past few months. They rallied on the back of price hikes happening along with strong demand. They are in a continuation uptrend but the banking index NiftyBank did a phenomenal job during the week.
The index posted a sharp rally from almost 30000 levels to near 34000 levels. This pullback was very much due as they have been underperforming and in an oversold zone for quite some time.
Going ahead if sentiments are strong then BANKNIFTY could outperform due to the technical evidence mentioned above.
Q) Small & Midcaps performed in line while Smallcap might have outperformed. What is driving the price action in these stocks?
A) This has been in line with our expectation that the broader markets are strong. In any bull run when the benchmarks go into some consolidation - the midcaps and smallcaps tend to outperform and that is what is happening. They might continue with their upside in the month of May as well.
Q) Please suggest 3-5 stock call for the May series with a target, stop loss?
A) Here is a list of top trading ideas for the May series:
Amara Raja Batteries: Buy| LTP: Rs 810| Stop Loss: Rs 760| Target: Rs 900| Upside: 11%
In the month of Jan 2021, the stock was trading above 1000 mark and now the stock is hovering near 800 odd levels. We have seen around 20% correction from the top and the stock is still in the long-term uptrend.
At this juncture, the stock is hovering near the potential reversal zone of a bullish harmonic pattern. In addition, it is at the support of a falling trend line on the daily chart.
The risk-to-reward ratio for going long is highly lucrative in this stock. Hence, traders are advised to buy the stock in the range of 810 - 800 with a stop loss of 760 for the upside potential target of 900 in the next 3 – 5 weeks.
Escorts: Buy| LTP: Rs 1118| Stop Loss: Rs 1070| Target: Rs 1190| Upside: 6%
Escorts has corrected from the top of 1400 to the recent bottom near the 1100 mark. This has brought the stock under the oversold zone in the smaller time frame.
At this juncture, the stock is trading near the potential reversal zone of bullish harmonic patterns called Butterfly.
For a medium-term trader, this could be a perfect price to go long with a time frame of 2 – 4 weeks. Thus, traders are advised to buy the stock in the range of 1120 - 1100 with a stop loss of 1070 for the upside potential target of 1190 in the next 2 – 4 weeks.
PFC: Buy| LTP: Rs 108| Stop Loss: Rs 96| Target: Rs 125| Upside: 15%
PFC underwent a significant correction of over 20 percent from the top of 140. At this juncture, it is hovering at the support of 200-DSMA.
In addition, the stock is currently trading near the potential reversal zone of bullish harmonic patterns called Shark.
Traders are advised to buy the stock in the range of 108 - 104 with a stop loss of 96 for the upside potential target of 125 in the next 2 – 4 weeks
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