Manav Chopra, CMT, Head Research - Equity, Indiabulls Ventures, said the short term trend for the Nifty remains bullish as long as it holds above 10,550-10,500 levels, which also coincides with its November lows. “The recent decline looks corrective in nature and the index is likely to hold its support levels. It could trade in a 10,5000-10,850 range before any bullish trending move.”
Edited excerpts:
Q: The momentum fizzled out in December after the 5 percent gain seen in November. Do you see a bounceback next week when much of the uncertainty is out of the way with respect to the outcome of the state elections? What are the charts suggesting?
A: The Nifty after the previous month's advance witnessed some profit booking last week as the index faced crucial hurdles around the 10,850-10,900 zone. The short term trend remains bullish as long as the index holds above 10,550-10,500 levels, which also coincides with its November lows.
The recent decline looks corrective in nature and the index is likely to hold its support levels. It could trade in a 10,5000-10,850 range before any bullish trending move.
The oscillators have declined from their overbought zone and any fresh bullish crossover will witness momentum once the index exceeds 10,750 levels for higher targets towards 10,950 and 11,200.
Q: Small and midcaps struggled in the first week of December. Do you think the pain is here to stay and investors should look at largecaps?
A: With the state election results around the corner and general elections in 2019, there will be an increase in volatility across the midcap space.
We expect defensive sectors to outperform and are likely to witness a relative outperformance in the near future. Colgate Palmolive, Marico, and Britannia are our top picks from this segment and we expect an upside potential of 10-15 percent.
From the largecap space, Zee Entertainment Entrerprises, Dr. Reddy’s Laboratories and Axis Bank have formed a strong base, which indicates limited downside.
Q: Exit polls and state election results will keep the markets volatile. What should be the investment strategy for investors as we approach the mother of all events – general elections next year?
A: One needs to maintain a stock-specific approach and avoid overleveraging on midcaps. Investors should be bullish on select private banks namely Axis Bank and HDFC Bank. In terms of sectors, FMCG and pharma are likely to be the bellwethers along with IT. We expect the market to consolidate for the next few months and see sector rotation.
Q: What is the Bank Nifty chart suggesting?
A: The Bank Nifty is likely to consolidate its gains around the 26,000-25,900 levels on the downside, which is likely to provide a cushion in case of a decline.
The Bank Nifty has tested its key long term average and needs to close above 26,750 for any bullish breakout. The oscillators remain in the buy mode and indicate support at 50 daily moving average, which is likely to hold. The index will resume its uptrend for targets towards 27,200.
Q) Top three trading strategies for the coming week with an investment horizon of 1 month?
A) Here is a list of top three ideas for a target of next 1 month:
Siemens: Target: Rs 1030-1065
There is the emergence of bullish divergence in MACD and record weekly volume breakout which indicates strong accumulation patterns. Investors can look at buying the stock now for an upside target of Rs 1030-1065
GSFC: Target: Rs 119-125
The price has formed a probable bullish Head & Shoulder pattern and has formed a right shoulder pattern. The structure hints for a higher bottom in making which indicates an attractive entry level. Investors can buy the stock now for an upside target of 119-125
ITC: Target: Rs 315-325
ITC recently took multiple supports at the rising trend line in the past few weeks and has formed a minor higher bottom. It has exceeded the weekly resistance level as well. Investors can look at buying the stock now for an upside target of Rs 315-325
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.
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