We think between Samvat 2076 and Samvat of 2077, the Nifty could touch 14,400, and on the downside, 11,200-11,100 will be the floor for the index, Shrikant Chouhan, Senior Vice President, Equity Technical Research, Kotak Securities, said in an interview to Moneycontrol's Kshitij Anand.
Edited excerpts:
Q) The Nifty recorded healthy gains of more than 3% and closed above its crucial level of 11,600 for the week ended October 18. What are the important levels to track for the Diwali week?
A) It was a good weekly close for the market after almost three weeks. All indices closed in the positive territory, including the Technology Index, which was down in the first half of the week.
The broader market, ie the Midcap and Smallcap indices, also rallied which usually happens only when the mainline market delivers extended gains for a longer time.
Even the Nifty Pharma Index closed into positive territory, with gains of over 3 percent for the week ended October 18. The index was down by 13 percent in the last two months and 23 percent in the last seven months.
In terms of levels, 11,695 is the crucial level, which was highest of the previous month, however, a close above 11,600 is equally crucial because it is a decisive close above the falling trend (supply line), which has resisted the market at all critical points.
The trendline is made by joining the points of several major events like “Indian general elections June 2019 (12,100)”, “Union Budget July 2019 (11,981),” and “Corporate tax cut Sept 2019 (11,694)”.
It has broken-out point at 11,600, and a decisive close above the same is as good as a victory of bulls over a sustained bearishness. Essential levels to track for Diwali week are 11,694, which was the previous immediate highest level.
The bearish breakaway gap that the Nifty left below 11,800 after the announcement of the Union budget 2019 and the spinning high of 11,858 of April 2019, from where the market witnessed the steepest fall due to sever fall in Jet Airways and where Trump administration said that they wouldn’t renew Iran oil waivers once they expire.
Q) Do you think we could inch towards 12,000 in the holiday-shortened week? Even though we added about 3%, but the underperformance of the banking index is a concern. What should be investors’ strategy towards banking space?
A) It could be the most onerous task but not impossible to hit the level of 12,000, I feel results on index giants like Reliance Industries and HDFC Bank are already discounted.
However, if positive surprises hit the street in terms of stake sale of Indian refineries to foreign investors, voting in favour of Brexit, fall in the dollar index or development on the US-China tariff front will help the market hit challenging targets in the short term.
Q) Any global or domestic events that can impact markets in the coming week?
A) A vote in favour of Brexit will resolve uncertainties, there since June 2016. On the domestic front, the government may give Diwali gifts to Indian citizen by cutting personal income tax. It could be the best timing for them. It would impact the market profoundly on the positive side.
Q) What is your outlook on markets for Samvat 2076?
A) On the day of Samavat 2076 the previous year, the Nifty was at 10,600. Since then, several events happened, but Nifty has refused to sustain below 10,600, which is encouraging.
Technically, we are of the view that from Samavat 2076, the golden era should start for Indian markets till Samavat 2079.
During the same period, we feel Government and Indian corporates would engage in fulfilling aspirations and dreams of an Indian citizen, which is the ultimate goal of PM Narendra Modi.
As the government has started addressing significant issues of India, we feel the mother of a bull run is not far away.
We think between Samvat 2076 and Samavat 2077; the Nifty could see the levels of 14,400. On the downside, 11200/11100 would be the floor for the Nifty and for Sensex 37,500.
Q) Dhanteras is on Friday (October 25). Is it the right time to invest in physical gold or Gold MF?
A) Buying Gold MF would be the right strategy. Instead, it should be the final strategy for those who invest in gold. It is the most straightforward method of buying and selling without any fear of cheating.
It is the most secure way of keeping safe. Apart from this, it helps to value our assets in gold at any point in time. We are bullish on gold, but if Indian currency appreciates, then the bullishness will remain little subdued.
Disclaimer: The views and investment tips expressed by investment experts 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.
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