"The 50,000 mark by the end of financial year FY24 can't be ruled out, but before that, one small correction can be possible," Jigar S Patel, Senior Manager - Equity Research at Anand Rathi, says in an interview to Moneycontrol. At present, he feels the Bank Nifty is well above the wide monthly central pivot range, which hints towards a pullback to 45,000 by September 2023.
With regards to broader markets, Jigar, with over 9 years of experience in technical analysis, remains skeptical until the recent highs of the midcap and smallcap indices are not taken out. Since they are overstretched, failing to clear the high might result in some profit booking, he feels.
Q: BHEL has seen formation of Bearish Engulfing pattern on the weekly charts with high volumes. Do you see a possibility of major correction and will Rs 95-100 be a crucial support area?
Yes, the recent Bearish Engulfing pattern on the weekly charts of BHEL with high volumes is a matter of concern. As we advance, we may see some lower highs and lower lows. Since the width of the monthly central pivot range is wide (refer to the black dotted line on the chart), this indicates some sideways price action before resuming its uptrend. One should add the fresh longs in the zone of Rs 116-108 for upside till Rs 150, and stop-loss of Rs 99 on a weekly close basis.
Q: Do you expect more correction in NCC before getting back into upward trajectory again towards its record high?
Yes, definitely, corrections can't be ruled out in the NCC. Following are some pointers that are echoing towards some corrections in NCC.
>> Recently, on the daily chart, NCC has made a bear divergence near Rs 175 levels, where price action was making higher tops and RSI (relative strength index) was making lower tops. (Refer to the blue line on the chart)
>> The 3.5-month-old bull trendline has been violated (refer to the red line on the chart).
>> The current price is trading below the monthly central pivot range, which is not a good sign. (Refer to the black dotted line on the chart.)
>> As we advance, NCC has to close above Rs 168 levels on the daily chart to continue its upward trajectory again towards its record high.
>> On a positive note, NCC has good support near Rs 135, which is an Ichimoku Cloud along with a 100-day exponential moving average. One can buy in the zone of Rs 133–136 for an upside target of 165 and stop-loss would be placed near Rs 125 on a weekly close basis.
Q: Do you think the Nifty50 will hit the 20,600-20,800, before getting into major correction?
The party begins on D-Street as the benchmark index Nifty50 reaches the milestone of 20,000 during the week that went by. The index extended its gains towards 20,200 mark and closed in green for the third consecutive week. Overall, the index surged around 2 percent from its previous week’s close.
After a consolidation in the range of 20,000–19,200, the index has finally confirmed a breakout, which has a theoretical target of around 20,600. However, in the coming sessions, 20,400 might act as an immediate hurdle for the index since that is the placement of a rising trend line. This trend can be a temporary resistance for the markets and can halt the momentum for the time being.
Above the same, there can be an extended move towards 20,600 or more. On the downside, 20,000–19,000 now might be a decisive support for the short term. We advise some profit booking below the same. With regards to broader markets, we remain skeptical until the recent highs of the midcap and smallcap indices are not taken out. Since they are overstretched, failing to clear the high might result in some profit booking. Thus, we advise traders to remain extremely stock-specific and follow strict stop losses.
Q: Will the Bank Nifty jump to the 50,000 mark by the end of financial year FY24?
The 50,000 mark by the end of financial year FY24 can't be ruled out, but before that, one small correction can be possible. Following are some pointers that hint towards some corrections in the Bank Nifty.
>> At the current juncture, the Ichimoku Cloud has not turned completely green. Having said that, the angle of the cloud is still flat.
>> In the previous last day of the week, the candle stick resembled a spinning top structure, which can't be ruled out.
>> At present, the Bank Nifty is well above the wide monthly central pivot range, which hints towards a pullback to 45,000 by September 2023.
Q: Will the Nifty IT get back into confirmed sharp uptrend if it fills the gap down of the mid of April month last year or get back to high of April, on the weekly basis?
Nifty IT uptrend has already started, and most of the stocks in the index are looking lucrative. Additionally, Nifty IT has given a non-stop rally of 7,355 points already after hitting the low of 26,028 in April 2023. The range of the said index has shifted to 32,000–35,000 for the coming few weeks. Any pullback to 31,500–32,000 can be seen as a lucrative buy opportunity in Nifty IT stocks.
Q: Will the Nifty FMCG index remain in a consolidation zone for a few more weeks before getting back above the 55,000 mark?
On a monthly scale, the situation of the Nifty FMCG index is a bit dicey because in July 2023, it made a Shooting Star pattern followed by a Bearish Engulfing candlestick pattern. A decisive close above 52,850 will negate the above-mentioned bearish pattern and resume its uptrend.
On a positive note the said index, on the daily chart, has sustained above the monthly central pivot range, which is a good sign. On the flip side, if Nifty FMCG closes below 51,000, then we may see a correction till 50,000.
Q: What are the most important factors to look at before taking a trade decision?
Before making a trade decision, it's important to conduct thorough research and analysis to increase the likelihood of making informed and profitable trades. The following 12 key pointers may help increase accuracy in your trading.
1) Technical Analysis: Analyse price charts, patterns, and technical indicators to identify potential entry and exit points. 2) Volatility: Understand the historical and expected volatility of the asset. More volatile assets carry higher risk but may offer greater profit potential. 3) Risk Tolerance: Determine how much risk you are willing to take on a trade. This should guide your position size. 4) Stop-Loss and Take-Profit Levels: Set clear levels for when you will exit a trade to limit potential losses and lock in profits. 5) Diversification: Avoid putting all your capital into a single trade or asset. Diversification can help spread risk. 6) Trading Plan: Create a trading plan that outlines your entry and exit criteria, risk management rules, and overall trading goals. 7) Time Frame: Decide on your trading time frame, whether it's short-term (day trading), medium-term (swing trading), or long-term (investing). 8) Earnings Reports: For stocks, pay attention to earnings reports and company announcements. 9) Economic Calendar: Be aware of economic events and news releases that can impact the asset you're trading. 10) Emotional Control: Keep emotions like greed and fear in check. Emotional decisions can lead to impulsive trading and losses. 11) Discipline: Stick to your trading plan and strategy even if the market doesn't go as expected. 12) Continuous Learning: The financial markets are dynamic. Stay updated on market developments, new trading strategies, and evolving regulations.
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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