Technical analyst and trader Amit Seth sees Hindustan Unilever, Godrej Consumer Products and Tata Consumer Products leading the next leg of gains in the FMCG index, as the three stocks are well placed on daily charts.
Seth, who has been a full-time trader since 2012 and focuses on combining price action with momentum and trend, thinks one Adani stock can be considered to be included in the portfolio.
ACC is available at a monthly support zone of Rs 1,600- Rs 1,700 and formed a bullish candle in the week, Seth tells Moneycontrol in an interview. Edited excerpts:
Are the charts indicating that the worst is over for the Nifty and it is ready to move to record highs in April?
The Nifty has rallied from 16,951 to 17,599 in the last five trading sessions. Although the momentum is strong, we are near the 100-day EMA (exponential moving average) resistance, which is placed at 17,615 and this level also coincides with the falling trendline resistance. Existing longs may continue to hold their positions with a trailing stop-loss. A close above 17,650 may propel the Nifty towards 17800 levels.
Strong support exists at 17,200 to 17,300 levels. Also, the rising 20-day EMA is placed at 17,293. If the market gives an opportunity in the form of a dip towards these support levels, it would be an opportunity to create fresh long positions with a good risk reward. Technically, a small pullback and consolidation would be healthy for the Nifty and enable it to make fresh record highs in April.
Can the Bank Nifty get back to its all-time top in the coming weeks?
Technically, the Bank Nifty is the stronger of the two indices as it is trading above all its important moving averages. However, for the Bank Nifty, 41,671 will act as a near-term hurdle as it is the last lower high on the daily charts.
Also, these levels coincide with a Kumo Resistance on Ichimoku charts. Once this level is taken out on a weekly closing basis, it may propel the Bank Nifty to make fresh near-term highs of 42,000 and 42,500.
Also read: Three mid-cap IT stocks investors are bullish about ahead of Jan-March earnings data
If the market gives an opportunity, a buy-on-dips strategy would be more suitable in the Bank Nifty from hereon. The Bank Nifty levels of 40,000 to 40,300 may act as good support, as we have a confluence of moving average and Gap support in these zones.
Can you suggest three stocks which have strong charts and can give double-digit returns in a month's time?
Defence sector stocks have been doing well. Bharat Electronics (BEL) is technically looking good. The stock has given a falling channel breakout on the weekly charts. On the daily charts, the stock has recently consolidated well near the 200-day EMA and is trading above all the important moving averages.
The stock has given a rounding bottom breakout after consolidating around the 200 EMA. Also, the stock is trading above all its important moving averages.
The stock has given a W pattern breakout on the weekly charts and is showing good momentum on the daily charts.
Do you think the Nifty IT index will break the upper threshold of the channel in the coming weeks?
Although after the recent pullback of the last few days, Nifty IT is above its 20-day EMA, the recent breakdown level of 29,600 will act as a near-term resistance, as it also coincides with a flat 200-day EMA. Nifty IT would require some kind of base building and accumulation pattern before it takes out the upper threshold of the channel since last June on daily charts.
Also read: IT sector analysts predict muted revenue gains in Q4, bleak near-term BFSI outlook
Would suggest Adani group stocks for investment or trading, as they have remained volatile for several weeks now? What is your overall take?
Of all the Adani Stocks, ACC is available at a monthly support zone of Rs 1,600 to Rs 1,700. Technically, the stock has formed a Bullish Hammer candle in the previous week and the same was followed up with a Bullish candle in the current week. Cement stocks have been doing well lately and ACC is available at the monthly support zone. One may consider ACC as a small part of the overall portfolio for investment purposes at these levels.
Is the Nifty FMCG index ready to see a big breakout on the higher side?
Nifty FMCG registered a falling trendline breakout on the weekly charts in the previous week. Also, the ratio chart with the Nifty is well placed and sloping up, which indicates a possible near-term out performance. One of the major reasons for the recent strength in this index is the outperformance of ITC after the Budget.
The next leg of the outperformance of this index may be led by Hindustan Unilever, Godrej Consumer Products and Tata Consumer Products, which are well-placed on daily charts.
Disclosure by the expert: "I don't have any position in any of the stocks mentioned in this article."
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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