The short covering can take the Nifty50 back towards 11,350. However, 10780 should hold good in August provided there is no negative surprise from international markets.
The Markets are stabilizing, and traders can continue to remain on long positions or take fresh longs, and take trailing stops/exit at weekly lows, Umesh Mehta, Head of Research, SAMCO Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) It was a roller-coaster ride for traders this truncated week. The Nifty failed to hold on to gains, and closed in the red for the week that ended on August 16. Where do you see markets headed in the coming week? And what are the important support and resistance levels to watch out for?
A) The market saw wild swings in the truncated week, but the downside seems to be abating for the time being. Ugly corporate numbers are not be hammered, which means that the downside is capped.
The short covering can take the Nifty50 back towards 11,350. However, 10,780 should hold good in August, provided there is no negative surprise from the international markets.
Q) Some of the stocks which are putting a brave face in a downtrend are the ones which are hitting fresh 52-week lows which include names like Avas Financiers, Apollo Hospitals, SBI Life Insurance, Trent, etc. among others. Do you think the momentum is likely to continue in these stocks?
A) “No stock is too high to buy” is the famous quote from Jesse Livermore. This is true for traders in the market.
If all the negative cues could not take the stock prices lower, what else would? Given the fact that markets are stabilizing, traders can continue to remain on long positions or take fresh longs, and take trailing stops/exit at weekly lows.
Q) Any particular stock(s) which you prefer to buy on dips considering the fact their fundamentals are intact, but are largely falling due to external factors?
A) The private banking stocks like HDFC Bank and IndusInd bank, on the pretext that FPIs were selling heavily, have corrected by a good margin. They offer a good risk to reward from short to medium-term perspectives.
Q) In terms of technicals, any stocks which witnessed a breakout in terms of MACD, Stochastic, or Bollinger Band?
A) Nifty, Pharma and Auto are showing divergences on MACD, indicating that downward pressure is subsiding, and that the bulls are slowing gaining strength respectively.
RSI too is showing a record reading on the lower side, which confirms the oversold state of the market. Any good sentiment booster can propel the markets higher, but that may be short-lived. Thus the traders have to be quick in booking profits on the long trades.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 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.