After run-up in April, "over short term consolidation is possible in the Nifty50 on back of profit booking. It will be difficult to touch lifetime highs in May itself but we can see that possible in subsequent months," Ashish Kyal, Founder and CEO of Waves Strategy Advisors says in an interview to Moneycontrol.
He feels for now immediate hurdle on the Nifty50 is at 18,190 levels from where the profit booking can be possible, however, 17,756 is important Gann support level.
The Chartered Market Technician with strong expertise on Elliott wave analytics says the Bank Nifty can move towards lifetime high level in May. "Usually the earlier peaks act as resistance and so target for May series can be near 44,000 levels for Bank Nifty," he added.
Q: Considering the current momentum, do you expect the Nifty50 to hit record high in May? What is the chart telling you?
Nifty has shown strong rise and it has moved precisely as per Elliott wave chart pattern. Overall the trend is positive and we can see broadbased buying along with sector rotation. Every day the rally is led by different stocks and sectors which is a healthy sign.
CNX Midcap and CNX Smallcap sectors are also participating in the up move. Nifty has managed to cross back above psychological 18,000 levels which is showing positive momentum. The overall tone is bullish. Nifty touched lifetime highs of 18,887 on December 1, 2022. After forming a low on March 20, 2023 near 16,828 index has rallied by nearly 8 percent already.
Over short term consolidation is possible on back of profit booking. It will be difficult to touch lifetime highs in May itself but we can see that possible in subsequent months. For now immediate hurdle is at 18,190 levels from where we can see profit booking. 17,756 is important Gann support level.
Q: Do you think the record high is possible without IT index that has been into consolidation mode? Will it be possible for IT index to get into momentum?
CNX IT index has shown steep fall on April 17, 2023 after Infosys results were declared. The index touched 26,180 on that day which is also multiple price action support area. Prices have bounced thrice from that support zone and we have started seeing reversal back on the upside.
Interestingly, selective Midcap IT stocks have shown minimal correction and is outperforming which is a positive sign. So, IT index can start gaining momentum and give breakout.
Q: Will it be easy for the Bank Nifty to get pass its record high in May? What is your target for May series?
Bank Nifty is outperforming and is only 2.1 percent away from the lifetime high levels of 44,151. Despite of poor results declared by Axis Bank, Bank Nifty still outperformed and managed to close above psychological 43,000 levels. This keeps the overall tone positive.
Bank Nifty can move towards lifetime high level in May. Usually the earlier peaks act as resistance and so target for May series can be near 44,000 levels for Bank Nifty.
Q: Will the Nifty FMCG continue to hit record high in May as well?
FMCG sector has strongly outperformed on back of major contribution by heavy weight ITC. The stock has been strong for many months now. It is best to use dips to enter into the sector as defensive sector outperforms during higher interest rates scenario so FMCG outperformance can continue in coming months.
Q: Which are the sectors looking attractive for investment for May?
Nifty Pharma sector can be the dark horse. We can already see strong outperformance in FMCG space and now Pharma from defensive sector should start catching up. The index has formed double bottom near in March 2023 and now can head much higher from here. It is right time to start accumulating stocks from Pharma sector.
Q: Any stock for May where you have a super bullish view? What are the parameters giving you conviction about the stock?
Dr Reddy's Laboratories from the Pharma sector is already hitting 52-week highs even when the index is yet to catch up. This shows strong relative outperformance and as we see positive momentum picking up in pharma space this stock can take leadership position. On upside the stock has potential to reach Rs 5,600 levels with Rs 4,600 as important support.
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