We believe Nifty50 will find support near its band of short-term averages of 11,430-11,480 levels and also 61.8 percent retracement of the recent up move (10,800-12,000) levels, Rajeev Srivastava, Chief Business Officer at Reliance Securities, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:
Q) Nifty breaks below 10-Day winning streak but then picked up momentum on Friday. What led to the price action on D-Street?
A) The Nifty50 resisted to cross the round number of 12,000 levels and witnessed sharp profit-booking across sectors and stocks. The sell-off accentuated with respect to the weekly derivatives expiry.
The Nifty50 managed to hold the previous day’s low on Friday and led some positive momentum with banking stocks gaining traction ahead of the quarterly results.
The Nifty50 declined by 1.27 percent while midcaps and smallcaps declined by 1.8 percent and 0.6 percent for the week.
Q) At a time when Nifty50 was surpassing crucial resistance levels, small & midcaps underperformed in the week gone by. Are investors booking profits after the recent rally seen in the broader market?
A) Well, there has been sector rotation during the week wherein investors started booking profits in IT and Pharma after a sharp run-up over the past few weeks while beaten-down sectors like Metals and Banking showed some positive trend.
Metals remained in focus with higher steel prices and strong demand post the lockdown being opened in various states of the country.
Q) Sectorally, Banks and IT stocks hogged the limelight. What led to the price action in those sectors?
A) The positive outcome of the quarterly results and buyback news flow of the IT sector was already being built up into the prices and post announcements witnessed sharp profit booking to decline in the range of 10-15% from their recent high.
Valuations are also at all-time high levels for IT sector so we believe there could be a time and price correction from current levels.
The banking sector hogged the limelight from lower levels as the moratorium hearing was being postponed to the next month and private banks gained positive traction ahead of the second quarter results for FY21.
Q) Which are the important levels or events that investors should watch out for in the coming week?
A) We believe Nifty50 will find support near its band of short-term averages of 11430-11480 levels and also 61.8% retracement of the recent up move (10,800-12000) levels.
On the higher side, the resistance levels would continue to be in the range of 12050-12,100 levels. Bank Nifty has closed at the 200 day average and crossover of 24,200 levels would give a breakout to test the previous month high of 25,300 levels.
INDIA VIX has gained by 6 percent to close at 22 levels as volatility has spiked up due to second-quarter results season and global events.
Q) Your top 3-5 technical trading ideas by 3-4 weeks?
A) Here is a list of top three trading ideas for the next 3-4 weeks:
Godrej Properties: LTP: Rs 865 | Buy | Target: Rs 1025 | Stop Loss: Rs 782 | Upside: 18%
The stock has completed its price and time-wise consolidation after a sharp up move, and now we expect a fresh move as we expect it to cross the 200-Day average
The stock is trading above all its long-term monthly averages and an inside range on monthly charts suggests an upper break out from current levels. Oscillators and momentum indicators like RSI and MACD are showing strength in the stock.
NMDC: Buy | LTP: Rs 83 | Target: Rs 99 | Stop Loss: Rs 81 | Upside: 19%
The stock witnessed a breakout above its short and medium-term averages with strong volumes. The sector is in positive momentum and RSI crossing upwards from its average line gives a confirmation of a strong move.
On the higher side, we expect a move near to Rs 92 levels and crossover of the same would extend to Rs 99 levels over the next few weeks.
Tata Consumer: Buy | LTP: Rs 477 | Target: Rs 535 | Stop Loss: Rs 445 | Upside: 12%
The stock has declined by 20 percent from its recent high and witnessed support near to its 100-Day average.
We believe that the stock has completed his 8-week fall and closed in a positive Doji on weekly charts confirming a reversal trend.
We expect the stock to bounce back over the next few weeks as RSI has also turned positive on the daily charts.
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