“Bias remains positive, and we would like to open the week on a positive note, but the shortened week as well as declining VIX could hasten the time decay limiting the possibility of call premium expansion,” he says.
Edited excerpts from a chat:
Nifty has rallied non-stop for the last 4 days to touch fresh record highs but it has been trading within a broad range of 23200-23500. Do you see higher chances of a strong move on either side of the band in the week ahead?
A new peak on Friday was not surprising, given the fact that 88% of Nifty constituents had started the day at the highest in 30 days. Most other sectors were also showing similar trends, except for PSU banks and metals. But despite this, a weariness and slow down was visible through the week, with an unwillingness on most days to chase prices higher. The slow down in upside momentum is also because of a sharp fall in VIX, which has compressed the trading ranges. Many saw this as a sign of distribution to be followed by a fall, but the resultant short build up only added more legs to the uptrend on the last working day of week. Also, given the persistent bargain hunting that ensured that dips barely exceeded 23% off the peaks of the previous Friday, there is an expectation of larger upsides as we step onto the next week, which is a shortened one, with Monday being a trading holiday. However, we prefer to enter the next on a cautious note as negative oscillator divergences have emerged, with fast stochastics peaking, as well as standard deviation studies pointing to price nearing interim extremes. This should ideally call for a mean reversion move, thus limiting our upside expectations for the time being to 23580-680. However, the turn lower may not be steep, and could return to the 24130 trajectory, if 23200-23050 supports restrain corrections.
How would you trade Nifty Bank in the holiday-shortened week?
Bias remains positive, and we would like to open the week on a positive note, but the shortened week as well as declining VIX could hasten the time decay limiting the possibility of call premium expansion. We see low chances of Nifty Bank exceeding the 51000 mark this week and have our downside marker placed 49500.
How does the momentum look like for sugar and ethanol related stocks like Praj Industries and Shree Renuka Sugars?
Even though stocks like Dalmia Sugar, Balrampur Chini, Eid Parry, Praj Industries and Renuka gained significantly early in the week, most of them lost ground towards the end of the week and closed away from the highs of the week. All these stocks have seen reversal candles formed in the daily time frame and the average 14-D RSI has been pushed above 70 flagging overbought situations. We could see profit booking initially next week but given the positivity seen in the weekly periodicity, we should expect such pullback to be bought into.Sustained buying has been seen in PSU stocks. Any names that you would take a bet on in the week?Big gains were seen in defence, oil production and refining companies. Expect positivity to continue in LIC, HAL, BEL, BPCL and HPCL in the coming week.
Shares of Titagarh Rail was the top performer in the week with 23% return. Do you see some more steam left as rail stocks may remain in focus ahead of Budget preparations?
We see 1554 as a fair price beyond which buyer exhaustion could set in. The fact that exit poll peak of 1594 is also nearby elevates the possibility of profit booking or an extended period of consolidation. A close beyond the same could steady the upside trajectory aiming 2030. Downside marker for the week may be placed at 1453.
Give us your top picks for the week
RALLIS (CMP – 320)
View – Buy
Targets – 335 – 350
Stoploss – 304
The stock has been moving within a tight weekly consolidation band since March. This week we have seen this tight range being broken on the upside. Also, the in the weekly time frame, the MACD has broken above the signal line indicating continuation of the upside. We expect the stock to move towards 335 and 350 in the next few weeks. All longs may be protected with stoploss placed below 304.
JSWENERGY (CMP – 683)
View – Buy
Targets – 715 – 750
Stoploss – 646
The stock has been honoring the 100 day SMA since June 2023 and a bounce from the 100 DMA on 04th June triggered the next round of upside pushing the stock above the horizontal resistance of 655 into the uncharted territory this week. 14 week RSI remains above 65 lending strength to the upside. We expect the stock to move towards 715 and 750 in the next few weeks. All longs may be protected with stoploss placed below 646.