"Any close above 18,000 on the Nifty50 will be first sign that the uptrend is resuming again. We need to also see participation from broader market which is lacking so far. So next 1 to 2 weeks will provide a lot more clarity if we can inch towards previous all time high levels," Ashish Kyal is the Founder of Wavesstrategy.com says in an interview to Moneycontrol.
Among stocks, he believes ABB is one of the strongest stocks that one can find. "We can expect this wave 5 on upside to take prices to Rs 3,600 or even higher levels," he says.
But on Adani group stocks, the Chartered Market Technician advised that it is best to avoid investment in the group companies as more pain is left and it is still not out of the woods.
Do you think the Nifty will find it difficult to climb the previous record high? What is your Elliot Wave theory and charts telling you?
The Nifty has been slowly inching higher but is yet to show good momentum. We need it to first give a break above Budget day high of 17,970 followed by psychological level of 18,000. As per Elliott wave and charts, we might still not be out of the woods as we are yet to see faster retracement above these important levels.
Any close above 18,000 will be first sign that the uptrend is resuming again. We need to also see participation from broader market which is lacking so far. Majority of the stocks are still trading below their 50-day average and for a healthy rally Midcap and Smallcap stocks need to participate. So next 1 to 2 weeks will provide a lot more clarity if we can inch towards previous all-time high levels.
Bank Nifty is also not giving great support to the market. Do you see any kind of major strength coming in the banking index in the coming weeks?
Bank Nifty collapsed from 43,000 level made on January 24, 2023 and touched the low of 39,419 on January 30. We are seeing attempt on upside and if Bank Nifty manages to cross above 42,000 level then we can see it taking a leadership role.
Participation from Banking stocks is important to take the market higher but rising interest rates globally and in India with reduction in liquidity remains a concern. So we might see consolidation or pressure in February 2023 but eventually from March 2023 this index can pick up steam.
Adani Group stocks have been quite volatile for around three weeks now after recent sharp correction? Do you think one should start investing in some of them?
Adani group stocks have started correcting much earlier and not only on back of recent news. Adani Enterprises top was made at Rs 4,190 on December 21, 2022. It is only since January 27, 2023 that the downside momentum increased on back of the news. But the stock has been already under pressure since beginning of 2023.
After the crash in Adani Enterprises prices touched the low of Rs 1,017 level and from there we have seen retracement of precise 38.2 percent on upside. This upside retracement is only a dead cat bounce or wave 4 pullback and one leg in form of wave 5 is pending on downside that can again take this stock towards Rs 1,380 or lower levels.
So, it is best to avoid investment in even the group companies as more pain is left and it is still not out of the woods.
Why are you a big fan of Elliott Wave theory?
Elliott wave theory is GPS of the market. It is forward looking tool that helps traders and investors to understand the probable future path of market or that of the stock. It is one of the best forecasting technical analysis study that helps you to understand maturity of the trend and if the bigger trends are about to reverse.
Many novice traders look at Elliott wave as 100 percent sure shot tool but one needs to understand that it only indicates market mood or collective crowd psychology in terms of probability and one needs to combine this along with Price action.
Do you see the rally to continue in PB Fintech for coming sessions, even after the fantastic run up for second straight week?
PB Fintech showed a good up move over past few weeks but it has yet to show a clear higher highs and higher lows formation that as per Dow theory confirms reversal from downtrend to up. So we need to see if prices can show break above Rs 600 level which will be first sign for a good upward trend.
New age stocks are showing some relief after a long time but we are yet to see a higher low in them which will further provide conviction to bet on the long side.
Do you think the charts of ABB India are becoming strong now and the stock can hit Rs 3,500 mark in current year itself?
Yes, ABB is one of the strongest stocks that one can find. This stock has found very good support near 61.8 percent retracement level at Rs 2,640 and showed faster retracement above prior leg. This indicates both price and time reversal and we can expect this wave 5 on upside to take prices to Rs 3,600 or even higher levels.
Do you think the Nifty Oil & Gas is in the process of bottoming out to get back into strength?
Nifty Oil & Gas has corrected nearly 17 percent in less than 2 weeks. We have seen very sharp decline and yet to see any accumulation or bottoming formation. Short term pullback from oversold state is not ruled out but it is better to avoid bottom fishing here and wait for consolidation or pattern to emerge.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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