Accumulate only good companies at major supports with a medium to long-term view. Investors should ideally buy in tranches as markets may even hit the levels of 10,000/9,850, if it fails to form any reversal formation on the daily basis, says Shrikant Chouhan of Kotak Securities.
On the weekly basis, the market closed below the level of 10,418 which acted as an important support for the market since May 2018.
To break such an important support line indicates that market is under severe selling pressure and it would further invite selling pressure at each major resistance levels in the future as well.
It was crucial for Nifty to hold above the level of 10,417 on a weekly closing basis; however, it failed which implied that a further fall towards 10,000-9,850 is possible in the near future.
On monthly basis, the market has reached 20-months SMA at 10,330, daily PCR of the current month was at 0.85 (overall PCR was at 1.11), daily RSI was at 21 and India VIX was at 19.75 on Friday.
Well, the above data suggest us that markets are turning oversold in the short-term that would trigger sizeable pullback move this week, if Nifty forms any reversal pattern on daily basis.
Technically, we feel that the Indian rupee has completed its first lower target at 74.00 and it should bounce back sharply at least in the near-term.
For the Brent crude, our view is $87/88/bbl which would act as an immediate hurdle and correction is due in the short term.
In brief, the market is turning oversold on the daily charts; however, positional traders can take long trade only for playing pull back.
For investors, our advice is to accumulate only good companies at major supports with a medium to long-term view.
Investors should ideally buy in tranches as markets may even hit the levels of 10,000/9,850, if it fails to form any reversal formation on the daily basis.
Large cap stocks have fallen more than 20 percent to 25 percent, which helps investors to make decent returns in the medium to long-term.
On the higher side, any pull back up move could arrest at 200-days SMA, which is placed at 10,800.(Disclaimer: The author is a senior VP (technical research), Kotak Securities. The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions)