I will start off with the Nifty IT Index. It is down around 3 odd percent. Any technical triggers that could have led to this fall or how are you looking at the IT Index?
Rohit Srivastava: If I look at the technical setup, we may today see some kind of a small momentum divergence between the peaks of 30th August and 17th September. But then, that is a lot in hindsight. The real breakdown is only happening today, which is that it might close below the 20-day average, which is close to around 42,469. And if it does that, then it does open up the possibility of coming down to maybe 41,145. Now, that is not a lot of downside, if you really think about it right now. I have been sensing that globally, because we have actually seen a pretty strong rally into the run-up and IT sector is very much linked to global markets, we have seen a run-up in anticipation of the FOMC meeting and its outcome. We should not rule out the possibility that there is some profit booking that follows an event when typically it is buy on expectation and sell on news kind of a situation. So, that is where I think the IT sector may be taking a hit apart from whatever news flow is happening, that is the only near-term risk that there is some profit booking post FOMC meeting and that does affect IT as well.
And how is the overall Nifty setup looking like? We have been scaling new highs. Today, again, we are up above the 25,400 level. If you are expecting some profit booking to come in the Nifty IT index, do you expect some profit booking after the Fed meet overall in the market as well be Nifty Nifty Bank?
Rohit Srivastava: Yes, so at least on Nifty, we have been waiting for it to peak out somewhere close to 25,500, 25,550 and possibly at least come down to 24,800 from there. There is a case for further downside, especially when we look at the extremely overbought conditions and say the midcap and smallcap indices because both of them on the monthly charts have an RSI reading of around 92, which sort of gets us to a very extremely overbought situation.
And September, October, seasonally we do see correction. So, therefore, broadly speaking, we were expecting Nifty to pull back. The surprise is, of course, Bank Nifty, because Bank Nifty is now gone past a couple of retracements, 66%, 78% and we start questioning whether this is the start of a new leg in banking.
I think it is open to testing its previous high close to 53,334 and banking, in fact, is probably the only one giving a sign that maybe, maybe not will you get a correction or not? If there is a question mark, it is coming from banking right now, but Nifty has not broken out yet. In fact, it is looking more toppish if you ask me and therefore, I still think it should not surpass the 25,500, 25,550 range.
On the FMCG side, how are things looking like? How is the Nifty FMCG index is looking?
Rohit Srivastava: Lot of money has gone into these defensive spaces, both FMCG and pharma have sort of attracted all the attention over the last two months, but that rally also should be waning. And we have written about the pharma index yesterday, completing what we call as a five-year structure over the last six months since I think March of 2024 and when that happens, we sort of look for some kind of a pullback, consolidation.
Same I would think in FMCG, because the most recent rally again has somewhat divergences in terms of its momentum. It does not have the same momentum it had when it was going up in July and that weakness means that eventually somewhere, you get a pullback and you get a consolidation.
So, I think the best part of the FMCG pharma rally, the defensive rally sort of should be coming to a close. We should wait for them to pull back, consolidate for a while before we really re-enter this space again.