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Last Updated : Jun 09, 2018 10:14 AM IST | Source: Moneycontrol.com

Time to go short? Risk reward is attractive to create short positions on Nifty

The risk-reward ratio at this level is quite attractive to create short positions, says Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas in an exclusive interview.

Kshitij Anand @kshanand
 
 
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The risk-reward ratio at this level is quite attractive to create short positions, and on the downside, 10,417-10,300 levels will be the targets to watch out for, Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas, said in an exclusive interview with Moneycontrol.

The Nifty50 on weekly basis closed in the green despite huge volatility. It managed to close above its crucial levels of 10,750. What does weekly and monthly chart tell about the technical picture?

The Nifty, in the week gone by, witnessed sharp swings in both the directions and ultimately posted a third consecutive weekly positive close. The detailed structure i.e. the daily chart shows that the price action over these three weeks is showing the characteristic of a pullback.

This means that the move is unlikely to develop into a larger rally. A higher time frame, i.e. the monthly chart reveals that the Nifty formed a Doji pattern for the month of May. A Doji is a sign of exhaustion in the market.

Thus, we are likely to witness a correction unless high of the Doji pattern i.e. 10,929 gets taken out. The risk-reward ratio at this level is quite attractive to create short positions. On the downside, 10,417-10,300 will be the targets to watch out for.

Plenty of stocks hit fresh 52-week lows this week instead of 52-week high. Do you think these are stocks which are carrying the momentum and investors should ideally book profits or stay away from them?

The market breadth has been weak for quite some time. A number of stocks, especially from the broader market, are in a downtrend from short term as well as long-term perspective.

One should definitely stay away from these stocks and those who are still holding on to these tumblers should be looking to get rid of them

What is your call on smallcap and midcap stocks? Should investors stay away or just book profits on rallies?

There is a huge divergence between the Nifty and the mid and small cap indices. The Nifty is still hanging on above its crucial short term and medium term moving averages whereas the mid & small cap indices are way below the respective averages.

They have even breached their March lows. Clearly, there is a weakness in this space. In terms of wave structure, these indices are forming a complex correction and the bounce over the last couple of sessions is a part of the larger decline. Thus, one should use this bounce as an opportunity to exit.

What are the top 3-5 positional calls which could give handsome returns to investors in the next 1 month?

ICICI Bank Fut: Sell| Stop loss: Rs 302 | Target Rs 255| Return 11.4%

Ashok Leyland Fut: Sell| Stop loss: Rs 152| Target Rs 132| Return 8.9%

Mindtree: Buy| Stop loss: Rs 982| Target: Rs 1,120| Return 9%

(Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions)
First Published on Jun 9, 2018 10:12 am
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