The correction might get deeper if 11,800 gets traded on lower side on a weekly basis and in that case the fall could extend till the levels of 11,410 and 11,250.
Amid heavy volatility, the bulls came out as a winner and the Nifty50 ended the year with a gain of more than 1,300 points. The bulls continued having an upper hand in selective large caps throughout the year and acted as a major contributor to the Nifty.
Though FY2019 left the traders on a joyous note, and the trend is likely to continue, but volatility would not be ruled out in FY2020. We could see much higher levels in the coming months, but the journey would not be smooth.
The higher top and higher bottom cycle is still intact, but negative divergence on the monthly chart suggests that mild retracement is expected from its current levels. Until 11,800 is intact, the short term trend will remain bullish.
The correction might get deeper if 11,800 gets traded on the lower side on a weekly basis, and in that case, the fall could extend till the levels of 11,410 and 11,250. From the last three years, the Nifty50 has been trading in the upward sloping channel, and this trend is suggesting that any correction would provide a prudent opportunity to the traders from time to time.
As the overall trend is still up, the Fibonacci projection suggesting that 13,078 is likely to be the next target for Nifty50 in the current year. On a weekly time frame, the prices are trading above all major medium term moving averages, which is likely to act as a cushion on any fall.
As per the overall structure and price pattern, aviation stocks are emerging as a lucrative buying opportunity on current levels with the medium term perspective. Apart from this, private sector banks and small finance banks are likely to be the flavour of 2020 and ICICI Bank, IndusInd Bank, Ujjivan Small Finance Bank and IDFC First Bank would be our preferred picks.
The Author is Senior Research Analyst at Rudra Shares & Stock Brokers Ltd.Disclaimer: The views and investment tips expressed by investment 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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.