We are expecting more volatile sessions for the upcoming week until we get any positive trigger or control on the COVID-19 situation, Sumeet Bagadia, Executive Director at Choice Broking said in an interview with Moneycontrol’s Kshitij Anand.
Bagadia added that currently, Nifty seems to have resistance at 15,000 levels, whereas support is placed at 14,250 levels.
Here are edited excerpts from the interview:
Q. Indian markets remained volatile throughout the week and closed in the red. What led to the price action?
A. Investors are more cautious about the second wave of COVID-19 in the country as rising cases day-by-day are continuously influencing market players as well as the foreign investors.
During the week, the market was highly volatile, after a fall in Monday's trading session. But, the benchmark index witnessed a good recovery throughout the week.
All the sectoral indices like Nifty Pharma, Energy, Auto and Metal recovered their early losses and managed to close at weekly highs while Nifty IT and Realty were the top losers for the week.
We are expecting more volatile sessions for the upcoming week until we get any positive trigger or control on the COVID-19 situation. At present, Nifty seems to have resistance at 15,000 levels, whereas support is placed at 14,250 levels.
Q. Small and midcaps also suffered slightly more than the benchmark indices. What is leading to pressure on broader markets – is it a rise in inflation which could weigh on the RBI, lockdown/curbs could slowdown economic activity, etc.?
A. In the current year, till date before the recent selloff in the market, the mid and small-cap index was the outliner in terms of the return.
In the anticipation of major Indian states again going into a lockdown, there was a massive sell-off in the market, but more into the broader market.
There is no doubt that the lockdown will impact or delay the ongoing revival in economic activities. But, this is required to tame the second wave of COVID-19 infections.
On the contrary, as against the expectation of broader and stricter lockdown, actual lockdown seems to be localised with a relatively lesser impact on the economic activities as compared to last year’s lockdown.
With the RBI forecasting inflation to be in the stipulated range, we feel that inflation seems not to be a concern for the market.
Also, the RBI seems to have given importance to economic growth over inflation thereby maintaining an accommodative stance in the recent monetary policy.
We feel this correction was required for a healthy bull trend in the equity market. We reiterate our positive view on the equity market performance and this recent selloff can be a good opportunity for an investor so as to make a respectable return in the medium term.
Q. Sectorally, Realty and IT were top losers for the week gone by. What is weighing in these two sectors?
A. The Nifty IT counters performed well in the last couple of days on account of rise in the dollar index and positive global sentiments. Although, during the week we witnessed further profit booking due to volatility in the dollar index and fear of rising COVID-19 cases.
On the daily chart, the index has taken immediate support at around 25,300 levels and showed some recovery. Moreover, an oscillator Stochastic has indicated positive crossover, which suggests bullish strength in the index.
The Realty sector is under pressure during the week ahead of the second wave of COVID-19 infections and unexpected lockdown in the Indian states.
There was a massive sell-off in the market in Monday's trading session where nifty realty was down more than 6 percent in a day after a minor pull-back, the realty index has traded into a narrow range.
On a technical front, the realty index has formed a Bullish Harami candlestick pattern, which suggests a reversal in the counter.
However, MACD is still trading below the zero line with a negative crossover and Stochastic is hovering near its oversold zone, which suggests that upside movement is capped for the upcoming trading sessions.
Q. Any important levels that traders should watch out for in the coming week on Nifty and Nifty Bank?
A. On the weekly chart, the Nifty Index pulled back after making a weekly low at 14,248.70 levels in the week gone by. On a broader picture, the index is trading in a range of 14,250-15,300 since March.
The VIX has also settled at the 20.40 level which suggests the index may trade in range. The Nifty has taken support from 61.8 percent FRL of its previous up move which means that if it sustains above this level the index can show upside movement.
For the upcoming week, the Nifty has strong support at 14,250 levels. While breaching below, it can fall towards 13,800-14,000 levels.
Though upside resistance comes at 15,000 levels. A move above the same can show upside levels till 15,200-15,300.
The Bank Nifty has taken support from the previous support zone and has bounced back from there. For the upcoming week, if the Bank nifty sustains above 31,480 levels, it can show an upside rally till 32,500-33,480 levels while a break below 30,500 levels can show a downside fall till 29,700-29,000 levels.
Q. Any top three-five stocks that are looking strong on the charts for the next three-four weeks?
A. Here is a list of top trading ideas:
HCL Technologies: Buy | LTP: Rs 1,012 | Target: Rs 1,090-1,110 | Stop Loss: Rs 960 | Upside 9%
On the weekly chart, the stock has formed a bullish Hammer candlestick Pattern, which indicates a positive sign in the counter.
Further, the stock has taken a support at 960 level which is a 61.80 percent Retracement level of its previous up move from 902 to 1,056 level that shows an upside movement in the counter.
Moreover, the stock has been trading with the strong support of 100-Days Moving Average (DMA) which is placed at 944 levels that shows a positive trend for the time being.
Hero MotoCorp: Buy | LTP: Rs 2,893 | Target: Rs 3,000-3,200 | Stop Loss: Rs 2,770| Upside 4%
On the weekly chart, the stock has formed a ‘Long-legged Doji’ candlestick pattern at which there is 78.6 percent of Fibonacci Retracement of its previous move from 2,640 to 3,635 level.
After giving a healthy correction from an all-time high level, the stock has bounced which suggests an upside movement in the counter.
Moreover, an Oscillator Stochastic has pulled back from an oversold zone with a positive crossover, which adds more bullishness to the prices.
Glenmark: Buy | LTP: Rs 571 | Target: Rs 650-720 | Stop Loss: Rs 510 | Upside 13%
On the daily chart, the stock has given a breakout of its “Consolidation Phase” as well as it is trading above its 21-Days Exponential Moving Average that is placed at 484 levels, which indicates that the stock can accelerate further.
Moreover, the stock has given a breakout of its "Upper Band of Bollinger band" which suggests an upside movement with high volatility in the counter.
A momentum indicator RSI and MACD both have shown positive crossover on the daily chart, which adds more bullishness to the price.Disclaimer: The views and investment tips expressed by 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.