Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
They say ‘Sell in May and Go Away’ but this time the markets proved them wrong. The domestic markets maintained the positive momentum throughout the month of May 2023. The index Nifty gradually retested the 18,600 mark during the process and ended the month with gains of over 2.5 percent. The sentiment was uplifted in the absence of any negative triggers from the global markets and few positive news on the domestic front.
During the month of May 2023, we were expecting profit booking from the zone of 18,200 – 18,500, but the bulls have managed to clear this zone with ease. Now at this juncture, the index is hovering near the 88.6 percent retracement of the entire move from 18,887 towards 16,800.
Hence going ahead, the recent high of 18,662 would remain an immediate trigger for the bulls. A sustainable move above the same might result in a new life high for the index.
In a best-case scenario, we expect the ongoing momentum to take a halt near 18,900 – 19,000 zone since that is a placement of a rising trendline on larger degree charts. Currently the weekly RSI (relative strength index) is hovering near a resistance of falling trend line.
The volatility index (VIX) is once again near the reversal zone of 11 – 10. Historically, we have witnessed heavy volatility in the markets once the VIX sneaks below 11 mark. It would be wiser for traders to keep booking profits from here on.
On the downside, 18,450 seems to be an important support since that is the support formed by rising trendline. A close 18,450 might bring in the expected corrective impulse move in the markets.
Meanwhile, the Nifty Bank index outperformed the benchmark indices during May 2023 and registered a new lifetime high near 44,500 mark. On the daily chart we witnessed that this price action was accompanied with negative divergence of RSI. Also, we are now witnessing a lower bottom in RSI.
At this juncture, the Bank Nifty has rising trendline support at 43,700. Going ahead, a close below 43,700 might spoil the party for the bulls and we might witness profit booking in the markets. On the upside, 44,500 seems to be an initial resistance and only a move above the same might extend the rally above 45,000 milestone.
Here are three buy calls for short term:
Hindalco Industries: Buy | LTP: Rs 420.75 | Stop-Loss: Rs 390 | Target: Rs 445 | Return: 6 percent
Since May 2023, the said counter has been in free-fall mode which resulted in a 13 percent cut in price. At the current juncture, multiple bullish candlesticks patterns like Hammer and Doji have emerged along with daily RSI has reversed from 40 levels on a daily scale which is indicating further upside in the counter.
One can buy in small tranches around Rs 415-422 and another around Rs 410-415 upside. Target would be Rs 445 and the stop-loss would be Rs 390.
Firstsource Solutions: Buy | LTP: Rs 131.3 | Stop-Loss: Rs 114 | Target: Rs 155 | Return: 18 percent
For the last year, the said counter has been consolidating in the range of Rs 100-120 approximately. Recently, it gave a clean breakout along with heavy volume which hints towards further upside in the counter.
Additionally, on a weekly scale, MACD (moving average convergence divergence) is displaying a bullish crossover exactly above the zero line which is a sign of further bullish momentum.
One can buy in the range of Rs 125-135 for a target of Rs 155 and a stop-loss of Rs 114.
Central Depository Services (CDSL): Buy | LTP: Rs 1,067.90 | Stop-Loss: Rs 999 | Target: Rs 1,175 | Return: 10 percent
For the entire month of May 2023 it consolidated in the zone of Rs 970-1000. In the previous trading session, it gave massive breakout along with huge volume which is hinting bullish momentum in the coming few sessions.
The best part of the above-mentioned consolidation zone of Rs 970-1,000 is that those where the levels of monthly central pivot range (refer to the chart).
So one can buy in small tranche in the zone of Rs 1,060-1,070 and another Rs 1,030-1,040 with upside target of Rs 1,175 and stop-loss would be Rs 999 on daily close basis.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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