Nifty: Nifty trend still positive, could head to 20,900: Analysts

RUCHIT JAIN
LEAD RESEARCH, 5PAISA.COM

Where is the Nifty headed this week?
The index marked a new record high supported by broad market participation, which indicates that the near-term trend remains positive. FPIs have rolled over lesser short positions and have turned net buyers in the cash segment. The momentum readings on the lower time-frame charts are in the overbought zone in Nifty as well as in the midcap and the smallcap indices, but when the trend is strong, the momentum could continue in the overbought zone as well. The reciprocal retracement theory indicates possible targets in the range of 20,500-20,600. On the flip side, 20,000 will be seen as immediate support.

What should investors do?
The RSI oscillator in the midcap and smallcap indices is highly overbought, and thus, the risk-reward ratio doesn’t seem very favourable there. One can look for profit-booking there and trade with a focus on certain largecap names. Traders should look for opportunities from the banking and FMCG space as the Bank Nifty index has given a breakout during the week gone by while the FMCG index has seen an upmove after a long consolidation phase. GAIL and Can Fin Homes are our trading picks for the coming week, which could deliver good returns.

NAGARAJ SHETTI
TECHNICAL RESEARCH ANALYST, HDFC SECURITIES

Where is the Nifty heading this week?
A positive candle was formed on the daily chart with the gapup opening. The opening upside gaps of Friday and Wednesday remain open. Though Nifty placed near all-time highs, there is still no indication of any reversal pattern unfolding at the highs. On the weekly chart, Nifty formed a long bull candle, which signals a sharp upside breakout in the market as per long-term charts. With a strong positive set-up, one may expect upside targets of 20,500 and 20,900 for December. Immediate support is at 20,150.

What should an investor do?
Nifty and broader markets are in a sharp uptrend, and the present upside is likely to continue for the near term. One may continue with longs or look to create fresh longs in Nifty or selective stocks for the index upside target of 20,500. It is advised to book partial profits at the highs and trail stop-loss for the next upside of 20,900. Any dips down to 20,150-20,050 could be a buying opportunity. Stop loss for longs to be placed at 19,900. Banking, PSU banking, pharma, metal and FMCG sectors could outperform in the near term. Stocks with positive bias: Axis Bank, Canara Bank, Dr Reddy’s, Apollo Hospital, Jindal Steel, JSW Steel, Colgate and ITC.

APURVA SHETH
HEAD OF MARKET PERSPECTIVES & RESEARCH, SAMCO SECURITIES

Where is the Nifty headed this week?
Nifty has broken out of its all-time highs and is ready to head higher in the seasonally strong month of December. Nifty has ended on a positive note in 15 out of the last 20 years in this month. It has generated an average gain of 2.8% in December over the years. The recent rally from the low of 18,837 to the all-time high of 20,291 took 25 trading sessions, which is one day less than the fall from the October high of 20,222 to 18,837. This indicates that the market is in a strong uptrend.

What should investors do?
The 20,000 strike of December month expiry has the highest open interest. It has also witnessed the highest put addition on Friday. Thus, this level will act as a solid support for the December series. We recommend traders opt for a bull call spread in. Traders can buy a call of 20,000 strikes and hedge it by selling a 20,500 call in the monthly expiry. Shortterm traders can look for long opportunities in stocks like ITC, Torrent Pharma, GAIL, Can Fin Homes, Bajaj Finance and Bajaj Finserv.