The immediate key level to gauge the confidence around the life high would be a closure above 12530 while the elevated base around 11960 should hold strong for the upcoming week.
The immediate key level to gauge the confidence around the life high would be a closure above 12,530 while the elevated base around 11,960 should hold strong for the upcoming week, Sacchitanand Uttekar, DVP – Technical (Equity), Tradebulls Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) The Nifty50 has been on a joy ride in the week as bulls managed to push the index above 12000 levels. The index has already rallied more than 4% so what led to the price action?
A) Global cues have contributed significantly for helping the Nifty50 breakout above the 12,000 barriers with ease as investors were eyeing for a favorable outcome of the US election result despite ignoring the rise in COVID cases across Europe.
The current resurgence has been more on account of delays in the US election process as the event is getting stretched while on the other hand with better than expected September earnings numbers also gave tailwinds to the ongoing momentum in our market.
Q) Do you think if the momentum continues we could well hit record highs by Diwali or on the Diwali day itself? What does the data suggest?
A) Historical trends for the immediate reaction towards US election results have not been very clear. The event risk certainly varies from election to election but at this stage with the Polls suggesting leadership with Democrats while Senate numbers in favor of Republican the likely status quo on immediate key policy decisions is already getting factored in the price.
The upsurge in price certainly says that the bullish momentum should last even post the final outcome gets announced.
Hence, amid the logjam in the US elections, we may at least see our market continuing its bullish move which is also backed by earnings momentum & festive cheer.
Q) Which are the important levels that investors should track in the coming week or in the run-up to Diwali?
A) Private Banks along with NBFC remain the core engine of this ongoing momentum while Energy along with IT have also contributed well at the end of the week which may assist the index to retain its momentum.
Hence, the immediate key level to gauge the confidence around the life high would be a closure above 12530 while the elevated base around 11960 should hold strong for the upcoming week.
Q) On the broader markets front, both Small & Midcap underperformed benchmark indices in the week gone by. Looks like investors are staying with largecap names in the run-up to US elections as well as Diwali? What are your views?
A) Last week outperformance has certainly been due to strong September earnings and signs of firm recovery seen in our economy. However, in the run-up of US elections, FIIs have turned risk-averse and betted more on safe mega-cap stocks then midcap stocks.
That is why we are seeing large cap & mega-cap nifty contributors leading from the front once again but we believe this phenomenon to continue even post the US Election results and the Nifty could scale above 12,500 ahead of the Diwali week.
But, during the latter part of the month once the earnings season ends rotational moves could continue within quality Midcap & Small cap names & they could start outperforming benchmark indices.
Q) Any 3-5 trading ideas for the next 3-4 weeks?
A) Here is a list of top three trading ideas for the next 3-4 weeks:
Escorts witnessed a fresh breakout from the ongoing consolidation which almost lasted for 3 weeks till now. On the weekly scale, it has again registered a firm close above its 5 WEMA level.
While the trend strength indicators on its daily scale viz. ADX & RSI are showing signs of a likely uptick in momentum. The pattern indicates a price target up to 1385 which could be participated with fresh longs with a trading stop below 1240.
The stock witnessed a spike on its weekly scale as it recovery smartly from the 200- Days EMA zone. Fresh OI additions during the week gone by are showing signs of fresh long additions.
We expect the stock to retrace its prior declining move & hence the ongoing pullback could extend towards 2255 which could be participated with a stop below 1970
The stock rebound from the lower end of its ongoing Rising Channel pattern which was supported by a substantial jump in volumes.
The crossover of the weekly averages 5 & 20-Days EMA is also supported with a strong breakout on the Daily ADX that jumped & registered a close above 25 along with its +DI trending up.
A similar setup was last witnessed in the early part of June 2020 when the stock witnessed a fresh bullish sequence of higher tops followed by higher bottoms.
Positional longs should still be considered with a stop below 1040 for target expectations around 1285 followed by 1340.
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