We can expect limited upside till the Budget. Above 12,100, Nifty has scope to climb up to 12,300 and a slip below 11,720 would gradually take the index towards 11,600
Nifty has formed a longed-legged Doji candle on the weekly chart, which is an indication of an indecisive trend. During the week gone by, it traded in a range of 12,100-11,770.
Nifty has managed to make a new high at 12,103; however, it has failed to sustain at those levels on the back of a weaker broader market.
Currently, largecap stocks are exhibiting completely mixed behaviour, as they have travelled too far too soon. Mid and Smallcap indices are failing to participate on a consistent basis, which is normal ahead of monsoon.
For the week, again 12,000-12,050 would be a hurdle for the market. On June 7, when the market was down, Nifty initially halted at 11,769, which is positive as it implies that the prevailing trend is respecting the earlier resistance.
A weekly close above 11,860 this week would help the market to move towards 11,980-12,020 again. The broader and the larger trend of the market is bullish and it is unlikely that the index will break and sustain below 11,600, which was the low point of the election outcome day.
On the higher side, we can expect limited upside till the Budget. Above 12,100, Nifty has scope to climb up to 12,300 and a slip below 11,720 would gradually take the index towards 11,600.
The strategy should be to take benefit of the trading range and execute contra trades near the upper and lower trading range of the market.In the current week, build long position above 11,900 or short around 12,000 keeping a final stop loss at 11,820 and 12,100, respectively, for the same. Options data is suggesting us to trade short at higher levels.
Eventually, all sectors should do well but for the coming week, we expect the momentum to build up in auto, infrastructure and banks. Especially, corporate banks should be tracked closely to trade on the long side.
The author is a senior VP (Technical Research), Kotak Securities.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisionsSubscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.