Chandan Taparia of Motilal Oswal Financial Services finds the Nifty setup quite strong and expects it to surpass 17,777 levels and rally to 18,500 by Diwali.
Taparia became the vice-president of equity derivatives and technicals, broking and distribution at Motilal Oswal with more than 10 years of experience in equity research. In an interview to Moneycontrol, he shares why he thinks the rally towards 18,500 will be supported by financial and banking stocks, Reliance Industries, and select FMCG and auto stocks.
On the oil prices, he says crude has temporary topped out and is supporting the sentiment in the domestic equity market. "We are expecting some stability and more declines in crude over the next coming weeks which could keep the sentiment positive," he says.
Finally the Nifty reclaimed 17,500 and reported more than 15 percent recovery from June lows. Where do you see the benchmark in the short term?
The Nifty has been making higher lows from the last seven weeks and supports are gradually shifting higher. It surpassed its immediate hurdle and is holding above its key moving averages which indicates strength in the ongoing trend to cross an immediate resistance trend line.
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It has seen a quick spurt of more than 1,000 points in just last eight sessions with broad-based buying in most of the heavyweight counters. The setup is quite strong and we are expecting it to go beyond 17,777 levels and then extend fresh rally towards 18,500 by Diwali.
With the market uptrend, the volatility is also increasing and reached around 20 levels. What does it indicate? Also should one be cautious at these levels?
India VIX has seen a spike from its lows and is again near to 20 zones now, reason for rising VIX even after the market uptick is due to the surge in Call IV and unwinding pressure to Call writers. Even though there is a recent surge in Volatility, we are still at comfort zones and a hold below 18 could add a smoother rally in the Indian market.
What is the chart of Nifty IT index telling you? Do you expect the index to resume uptrend soon as it has been consolidating for more than couple of quarters now?
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Nifty IT has bottomed out along with decent recovery in the NASDAQ index. It seems that short term bottom in this beaten down sector has formed a short covering move and bargain buying can help in this sector.
Infosys is supporting the bullish breakout on the lower time frame and may help the sector to get follow up action. However we still believe that upside could be capped in other IT stocks so one needs to trade accordingly.
If you believe the Nifty50 can hit 18,000 or 18,600 in coming months, then what are those sectors that can drive the market towards these levels and why?
We are expecting the Nifty to surpass the 17,777 levels and extend the rally towards 18,500 zones by Diwali 2022. This rally could be supported by financial, heavyweight banking stocks, Reliance Industries, select FMCG and auto stocks.
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Do you expect the Bank Nifty index to surpass its high point 41,800 in the coming months? What is the chart telling you?
Bank Nifty has just surpassed its 61.80 percent retracement level near 38,200 and closed above the same. It has taken support near its key moving averages along with breakout from its falling channel. As of now a hold above 37,777 could extend the momentum towards 39,000-39,500 levels.
Are the charts telling you about major downtrend in crude oil futures in coming weeks or is it temporary correction?
Crude has temporarily topped out and is supporting the sentiment in the domestic equity market. We are expecting some stability and more declines in crude over the next coming weeks which could keep the sentiment positive and to add to that, FIIs flow is now required with softness in volatility to cheer this rally to head towards fresh breakout zones.
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