“We would wait for a break above 19,800 region to climb back onto the 20600 trajectory. Alternatively, a slippage back below 19450 could set our eyes on 19139-18900, but the chances of a collapse looks low for next week,” he says.
Edited excerpts:
How would you read the roller coaster ride amid the fear around Fitch report? Is the bullish momentum intact?
Ever since coming tantalisingly close to the 20k mark, Nifty has been on a clear down trend for the last 10 days or so. However, even as the trend leaned lower, every third or fourth day during this phase had a positive close, keeping Nifty not far from 19700, allowing traders to be risk-on. However, last week’s fall broke and held below the 20day MA for the first time since the recent uptrend began in March 2023. This ushered in panic, exacerbating the fall. Friday’s retracement is on anticipated lines, but is still within the bearish construct, even though we are now back inside a declining trendline channel, which stands a fair chance of evolving into a bullish flag. Such hopes will encourage positive upticks next week as well. We feel Nifty is likely to clear the 19550 barrier and some struggle, but expect bears to regroup once inside the 19600-670 band. We would hence wait for a break above the 19800 region to climb back onto the 20600 trajectory. Alternatively, a slippage back below 19450 could set our eyes on 19139-18900, but the chances of a collapse looks low for next week.
Small and midcaps were relatively less affected this week and signalled strength in the broader market. Which pockets of the market look more resilient than others?
At the start of last week, Nifty 50 was trading around 4% above its 50DMA, while the midcap index was trading 8.5% above its 50DMA. After carnage and the subsequent pull back, Nifty 50 is about 3% above the 50 DMA, while the midcap index continues to trade above 8%, suggesting that midcaps continue to fetch higher premiums, and traders have been unwilling to let go of their positions. At least not yet. It is only the benchmark indices clear key MAs that midcaps start to feel the heat. So, until then expect risk on approach to continue in mid and small caps.
After stellar rally last week, how are the charts looking like for IRFC?
IRFC is usually a sluggish mover, and the sharpness of the recent spikes was pleasant, but not surprising, given the extended period of consolidation that preceded this breakout. At last week’s peak of 48.3, the objective of the cup and handle formation may have been fully achieved. This explains the decline through the day on Friday, even when the broader market gained handsomely. However, despite the exhaustion, we are not able to spot many vulnerabilities, encouraging us to look forward to extension in uptrend aiming 62, as long as the corrective moves are held around 38.
Vedanta was down 9% last week. What would be your trading strategy in the coming days?
The abnormal volume as well as two days of trades below two standard deviations from 20d SMA does prompt us to be risk-on, and aim for 257-260. However, inability to hold above 245 will be an outright signal that this is no time to bottom fish. At present, the stock is trading well below key standard MAs like 200, 100 and 20, with nearest support of worth seen only at 206, the bear phase low of 2022.
Give us your top 2-3 ideas for the week-
1) SOBHA (CMP: 595)
View: Buy
Entry range: 595 – 587
Target: 614 – 635
Stoploss: 578
After the recent pull back, the stock has been consolidating around the 61.8% Fibonacci level and has formed an inside bar doji on daily time frame indicating an attempt to bounce back. We expect such a bounce back to scale 614 and 635 in the next few weeks. All longs may be protected with stoploss below 578 levels.
2) M&MFIN (CMP: 290)
View: Buy
Entry range: 290 – 285
Target: 298 – 307
Stoploss: 277
After hitting an all time high early last month, the stock has been witnessing profit booking making lower lows since then. We have seen an inside bar doji being formed near the horizontal support zone of 275. We expect this pull back attempt to take the stock towards 298 and 307 in the near term. All longs may be protected with stoploss placed below 277 levels.