"GSFC and MOIL have bullish setups on the short to medium term charts," Vinay Rajani, CMT, senior technical and derivative analyst at HDFC Securities, in an interview with Moneycontrol.
Considering the trend and the kind of resilience shown by these stocks, he believes that both GSFC and MOIL would generate healthy alpha from here for positional traders before and after the budget.
On the Bank Nifty, which corrected for a fourth consecutive week, the financial market expert with more than 16 years of experience feels that the fall in Bank Nifty from here would be limited as most of the negatives have been discounted in the price recently.
Considering the consolidation around 200-day EMA, do you think the Bank Nifty is over with the correction? Or do you see the index breaking October lows in the coming days?
For the last two trading sessions, Bank Nifty has been finding support on its 200 DEMA (day exponential moving average), which is currently placed at 44,568. Bank Nifty has already witnessed a healthy correction of more than 4,200 points from the all-time high of 48,636 registered in December 2023. 200 DEMA always has high significance as support when benchmark indices reach near it after a healthy correction.
Below 200 DEMA, we see strong support coming in the range of 43,800-44,000, derived from the upward sloping trend line, which adjoins the weekly low of March 17, 2023 and October 27, 2023. The recent fall in Bank Nifty is more sector-specific and there is no across-the-board weakness in other sectors.
Also read: Momentum mania: 12 new midcap stocks entered the Nifty 200 Momentum 30 Index
The breadth of the market is very strong and that’s why we feel that the fall in Bank Nifty from here would be limited as most of the negatives have been discounted in the price recently. The maximum downside could be up to 43,800 odd levels in case the index breaks 200 DEMA support.
October 2023 bottom is placed at 42,105 and we see less probability of that happening in the coming days.
Are the charts telling you that the Nifty 50 will break the 20,500 mark in the coming weeks, before resuming another leg of up move?
No. If correction were to continue, we see Nifty finding support in the zone of 20,800-20,900, derived from upward sloping trendline adjoining the weekly highs of July 21, 2023 and September 15, 2023. There is a huge unfilled gap in the range of 20,507-20,291.
In the bear case scenario, Nifty is expected to find support in this gap zone. Any level above 21,600 would negate the recent downtrend. The best part of in Indian market is the strong breadth, which gives us the confidence that the downside would be limited in benchmark indices from the current levels.
Also read: Budget and Markets: Will the PSU rally continue post-budget?
Has the Zee Entertainment Enterprises bottomed out after severe correction?
No. Zee Entertainment has nosedived more than 40 percent month to date. The stock has breached the previous swing low of Rs 170 on the long-term charts. It has also confirmed the bearish Head and Shoulder pattern on the monthly chart. So positionally stock looks weak.
However, we can not rule out the possibility of a pullback rally after such a steep fall in a short period. We see strong resistance between Rs 175 and Rs 180 in the stock.
Which are your top two budget picks, and why?
GSFC (Gujarat State Fertilizers & Chemicals) and MOIL
Fertiliser, mining and PSU sectors have been outperforming and the same is expected to continue from here. Both stocks have bullish setups on the short to medium-term charts. Considering the trend and the kind of resilience shown by these stocks, we believe that both GSFC and MOIL would generate healthy alpha from here for positional traders before and after the budget.
RITES was the biggest gainer in the Nifty 500 index. Do you see the stock extending its upward move in the coming weeks too?
In technical analysis, we say the trend is your friend. If a stock is resilient and is into bullish momentum, traders should always be with it. No matter what the reason is, railway stocks have been showing a great amount of strength on the charts.
The stock can remain overbought for a longer period unless the price breaks the support. At present stock is at its all-time high and the trend is expected to remain bullish in the coming days. The pattern target for the stock comes in at Rs 730 odd levels, where traders can think of booking profits or raising stop-loss.
KPIT Technologies seems to have decisively broken the consolidation on the downside. Do you see the stock falling towards 200-day EMA once?
The stock has broken down below the last 10 week’s price consolidation with a jump in volumes. In history, we saw this stock finding support near its 100 DEMA multiple times, which is currently placed at Rs 1,350 odd levels. The sustainable level below Rs 1,350 could drag the stock towards its 200 DEMA, placed at Rs 1,212 odd levels.
Do you think Nifty IT will consolidate in the coming weeks by taking support at around 35,500-36,000 area?
IT Index is all set to register a new all-time high above 39,447. At present, the Nifty IT index is down 7.5 percent from its all-time high. This is the only recognized sectoral Index which has failed to register a new all-time high in the bullish rally that started in April 2023.
Recently we observed bullish momentum coming back to the IT index. So yes, there is good support in the zone of 35,500-36,000 in the Nifty IT index and the same should be utilized to create fresh long positions in IT stocks.
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.
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