The momentum indicator RSI on the daily time frame is approaching the overbought zone of 80 (currently at 78), indicating that some profit booking at higher levels might be possible as Minda Corporation has had a continuous run-up for nine days," says Rajesh Palviya, Vice President of Research (Head of Technical Derivatives) at Axis Securities in an interview with Moneycontrol.
"However, from a medium-term perspective, the stock is an attractive buy in the range of Rs 240 to Rs 230 with a stop-loss of Rs 210 and a target of Rs 310-320," he suggests.
With over 20 years of experience, Palviya advises that from a short-term perspective, traders may take a contrarian bet and go long on Orient Electrica at lower levels around Rs 220-215, with a stringent stop-loss of Rs 200 and a target zone of Rs 245-250.
Q: Do you think the Nifty is likely to sustain above the downward sloping resistance trendline adjoining from record highs (December 2022) and all key moving averages, in the coming weeks?
With the help of a straight 5 percent up move in the past three consecutive weeks, the benchmark index has now recovered from its recent down move (17,799-16,828) by registering a "V" shape recovery. The recent visit of the short-term bottom has coincided with the prior support zone of 16,800 levels which reconfirms the strength of the recent rally.
On the weekly time frame, the index is now firmly placed and has given close above its five-month "downsloping" trendline of 17,600 levels indicating the change of the trend. The beginning of this rally was accompanied by the "bullish gap" formed on March 31, March 2023 in the range of 17,204-17,126 which signals the buying force.
The index is now sustaining above its 20, 50, and 200-day SMA (simple moving average) which supports the bullish sentiments for the upcoming weeks. Any profit booking towards the 17,600-17,400 levels is likely to generate fresh buying interest from the traders for the upside levels of 18,000-18,300 levels.
Q: Realty was the star performer among sectors, rising over 14 percent in the last three weeks. Do you expect the outperformance to continue in coming weeks too?
Since October 2021, the index continues to consolidate within a "descending triangle" pattern. The weekly price action is contracting and approaching the apex point of the triangle pattern. The index has formed a strong base at around 3,000-2,950 levels. This consolidation is also well placed above its monthly 50 percent Fibonacci retracement level of 2,861 (1,259-4,464) which remains a crucial support zone.
However, the recent up move was observed with low volume which indicates caution for investors. Hence investors need to wait for the decisive weekly close above 3,400-3,500 levels to take fresh long positions. Any upcoming weekly close above 3,400-3,500 levels will confirm the "descending triangle" breakout with the possible upside of 4,000-4,200 levels. Stocks like DLF, Oberoi Realty, and Godrej Properties may show strength in the near term.
Q: The Midcap and Smallcap indices also participated in the run-up. Do you expect them to outperform the benchmark?
Nifty Midcap broke above the falling channel from 32,939. It took support around 50 percent Fibonacci Retracement of a rally from 25,048-32,939 placed at 29,000 forming a medium-term support zone. It is trading above 20, 50, 100, and 200-day SMA indicating positive bias in the short to medium term.
The weekly strength indicator RSI (relative strength index) is in bullish mode and the weekly RSI crossover above its reference line generated a buy signal. It is expected to continue the positive momentum and it can outperform the benchmark. However, in the case of breaking below 29,000, the upside momentum will fade.
Nifty Smallcap took support around 61 percent Fibonacci retracement of a rally from 7,905-10,153 placed at 8,807. It forms a “Hammer” reversal pattern on the weekly chart and starts bouncing back. However immediate resistance is placed at 9,500 i.e. medium-term downward sloping trendline from the high of January 2022.
Decisively closing above 9,500 will keep upside momentum intact and help the index to outperform benchmark. In case breaking below the recent low of 8,682 will fade the upside momentum.
Q: Is the Nifty Auto index ready to surpass its record highs in the coming weeks, considering the run-up of the last three weeks?
Nifty Auto took support at 38 percent Fibonacci Retracement of the rally from 9,227 till 13,545 which was placed at 11,952. Weekly candlestick pattern forms a “Hammer” pattern which is a sign of reversal.
Index bounced back sharply in the last three weeks and in this process, it had taken out a falling channel from the start of February 2023 and is trading above 20, 50, 100, and 200-day SMA indicating positive bias in the short-to-medium term. The weekly strength indicator RSI is in bullish mode and the weekly RSI crossover above its reference line generated a buy signal.
Hence, we feel that the Nifty Auto Index is expected to surpass its record highs in the coming week. However, in case of index breaks below the recent swing, a low of 11,900 further downsides on the index will open.
Q: After breaking the consolidation of several weeks, Minda Corporation has seen a strong run-up of 35 percent in the last three weeks. Do you think it will surpass its record high?
Yes, on a weekly timeframe after consolidating for more than six weeks in a range of Rs 235-240 on upsides & Rs 180-185 on the lower side the stock has given a strong breakout with increasing volumes clearly indicating a further up move in the next week.
If we observe the overall structure of the stock on the monthly chart, it's exhibiting an extremely bullish formation headed towards the probable target zone of Rs 280-285 which coincides with the previous all-time high.
The momentum indicator RSI on the daily time frame is approaching the overbought zone of 80 (currently at 78) indicating that some profit booking at higher levels might be possible as Minda had continuous run-up for nine days, however from medium term perspective the stock is an attractive buy in the range of Rs 240 to Rs 230 with a stop-loss of Rs 210 for the target of Rs 310-320.
Q: Do you expect more selling pressure in Orient Electric which was the biggest loser in Nifty500 in the last three years?
Orient Electric (OE) on a monthly timeframe has given a Descending Triangle breakout at Rs 250 levels, a Bearish pattern that generally forms at the end of a downtrend. The current trend is strongly indicating a downside however a closer observation reveals that Orient Electric is approaching the Descending Triangle pattern’s target zone of Rs 210-215 and might give bounce back from the same level.
The overall volume trajectory has been consistently decreasing along with the momentum indicator RSI at an all-time low level of 40 showing that weak hands are exiting from the stock. So specifically from a short-term perspective traders at lower levels around Rs 220-215 may take a contra bet and go long in stock with a stringent stop-loss of Rs 200 for the target zone of Rs 245-250 and a close below the Rs 200 level should be viewed as the resumption of a downtrend and exiting the long position.
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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