A sustained trade beyond 16,350 which should now act as an immediate support area can take the Index higher to levels of 16,800, Aditya Agarwala, Senior Technical Analyst, YES SECURITIES said in an interview with Moneycontrol’s Kshitij Anand.
Edited Excerpts -
Q) A historical week for Indian markets. Nifty50 climbed above 16500 while Sensex touched 55K peak in the week gone by. What led to the price action? Was it short covering after the breakout which led the move?
A) Indian benchmark Indices have taken the centre stage as broader markets undergo a bit of profit booking. Further, Nifty-50 Index continued to ascend north ending the week with gains of 1.80% above the 16,500 mark led by a short-covering after bulls managed to take the Index beyond the intermediate hurdle of 16,350, the upper end of the narrow trading range.
A sustained trade beyond 16,350 which should now act as an immediate support area can take the Index higher to levels of 16,800.
Q) What are your expectations from Nifty and Sensex for the rest of 2021? What are your targets for Sensex and Nifty? Time to become cautious or ride the momentum?
A) Benchmark Index has broken out of a two-month-long consolidation phase triggering the resumption of an uptrend. A breakout from such a long consolidation phase usually has a sustained and prolonged up move.
Therefore, any minor decline or profit booking can be utilised as an opportunity to enter the market for targets of 17,000-17,500. Charts suggest it is time to ride the moment and not stay away.
Q) Small & midcap came under pressure because of BSE circular. But, do you think this space could underperform amid the movement of money towards largecaps or big-ticket IPOs?
A) Broader markets had a correction calling for some time now. Both Smallcap & Midcap Indices had reached extreme overbought territory on higher time frame suggesting profit booking on cards.
Further, going ahead this space can continue to underperform as money moves to largecap stocks and few largecap Banks as well.
Investors/traders should also keep their focus on the Bank Index which yet to cross its previous all-time high and a sharp upmove in the Bank Nifty from here on cannot be ruled out which could also take the Nifty higher to levels of 17,000.
Q) Well it looks like Indian markets are moving on steroids. Any clues which investors/traders should track that will make this markets a sell-on-rise market?
A) Indian markets have outperformed their peers in the week gone by and the momentum seems to favouring the bulls at the moment. Benchmark Index Nifty-50 is not trading at an overbought territory nor any signs of negative divergences are building up which could trigger a warning sign.
However, traders/investors should keep a close watch on the rising Covid-19 cases in the globe and a possible third wave in India which could be a dampener and send markets globally in a corrective phase along with our own markets. US FED talks on tampering will also keep markets a bit nervous.
Q) Which sectors are looking attractive and why? Any particular stocks which one can look at?
A) Nifty Bank and Financial Service sectors look attractive at the moment. Both the sectors have broken out of a long consolidation phase resuming their uptrends.
Stock to watch out for within this space are HDFC twins i.e. HDFC Bank and HDFC Ltd, Kotak Bank, Axis Bank and Bajaj Finserv.
Q) Top 3-5 stocks that one should look at buying for next 3-4 weeks?
A) Here is a list of trading ideas --
Tata Motors: Buy| LTP: Rs 307| Target: Rs 325| Stop Loss: Rs 298| Upside 6%
The stock has resumed an uptrend after breaking out of a narrow consolidation pattern on good volumes. Technical indicator RSI has turned upwards from the lower end of the bull zone i.e. 40 after forming a positive divergence confirming the bullishness.
HDFC Ltd: Buy| LTP: Rs 2703| Target: Rs 2840| Stop Loss: Rs 2640| Upside 5%
The stock has resumed its uptrend after breaking out of a bullish flag pattern on good volumes. Further, RSI has turned higher from 60 level confirming a strong uptrend dominance in the stock.
Reliance Industries: Buy| LTP: Rs 2144| Target: Rs 2260| Stop Loss: Rs 2080| Upside 5%
The stock is on the verge of a breakout from an inverted Head & Shoulders pattern neckline placed at 2150, a successful breakout on good volumes will take the stock higher to levels of 2260-2350. Further, RSI is suggesting a breakout is on cards.
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