Mehul Kothari AVP – Technical Research, Anand Rathi Shares & Stock Brokers said that 17800 on the Nifty50 would be a real test for the bulls in the coming week. A daily close above the same might open the doors for 18000 – 18350 levels.

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In an interview with Zeebiz's Kshitij Anand, Kothari said on the contrary, a daily close below 17500 could drag the index near 17200 – 17000 levels. In such scenario, the short-term structure would turn a bit fragile. Edited excerpts:

Q) A bullish week for Indian markets in the run up to Budget and post that as well. Benchmark indices rose over 2%. What led to the price action?

A) After a corrective move of two consecutive weeks; the week gone by was a kind of relief for the domestic markets. The Nifty50 spot almost retested 17,800 mark amid the absence of any negative triggers from the Budget.

However, the moment was short-lived since the markets came under pressure during the last two sessions where the index retested crucial support placed at the 17,500 mark. Eventually, it ended the week with gains of around 2.5%.

Q) Where do you see markets post Budget 2022? What should be the ideal strategy for the coming week? Important levels to track on Nifty and Nifty Bank?

A) Technically, the Nifty50 found resistance exactly near the 17,800 mark which was the 61.8% retracement level of the entire crack from the high of 18350 towards the low of 16836.

Thus, 17800 would be a real test for the bulls in the coming week. A daily close above the same might open the doors for 18000 – 18350 levels.

On the contrary, a daily close below 17500 could drag the index near 17200 – 17000 levels. In such a scenario, the short-term structure would turn a bit fragile.

Thus, traders should wait for a clear confirmation in order to create fresh long positions. With regards to the Nifty Bank index, it has already confirmed a breakout above the 39000 mark and the recent move seems to be just a pullback that might get arrested near the 38500 – 38000 zone.

Thus, only a breach of 38000 would damage the trend of the NIFTY BANK index. On the upside, it has the potential to rise towards 40000 and more but the confirmation for the same might come once the index sustains above 39000 level.

Q) In terms of sectors – metals, consumer durable, and pharma rose 4-6%. What led to the price action?

A) Budget announcements like increase in spending on infra, Healthcare, and overall focus on strengthening of domestic manufacturing acted as a positive catalyst for the mentioned sectors.

However, we are still not witnessing any kind of major confirmation of a fresh uptrend in all three sectors on the technical front.

Q) Death Cross was observed in Adani Ports, as well as Karnataka Bank? What should investors do?

A) Generally, any kind of moving average crossover is impactful if the underlying is in any kind of trend. In Adani Ports, there is a negative crossover of 50-Days SMA and 200-Days SMA but the stock is sideways.

Thus, there would not be any conclusive aspect to it. Investors should keep holding the stock till the time there is a breakdown, and that breakdown would be confirmed below the 650 mark.

Karnataka Bank too is sideways, and one should keep holding the stock with a stop loss of 60.

Q) Jefferies' Chris Wood Sees Sensex Hitting 1,00,000 In 5 Years. What does your chart check suggest?

A) Five years is a long-time frame to predict anything of this sort but if we go by pure technical then we are of the opinion that NIFTY has the potential to reach 24k – 30K in a few years.

We are wishful for this because if we consider the move from the loss of 7500 towards the high of 18600 as a new bull run then in that case markets generally grow twice or thrice from the previous top.

In the case of Nifty, that top is of 12,000. So, from top-to-top, the Nifty should rise towards the above-mentioned levels and that might happen gradually only.

Q) Any breakout stocks which you like to recommend for the next 3-4 weeks?

A) Here is a list of top trading ideas for the next 3-4 weeks -

Chalet Hotels: Buy| LTP Rs 260| Buy on dips| Stop Loss Rs 244| Target Rs 280| Upside 7%

As the covid cases are dropping, we are witnessing some traction in travel and hospitality stocks. Similarly, the hotel stocks have been doing well.

Recently, Chalet confirmed a breakout from bullish Inverse Head and Shoulder pattern which has a theoretical target of around 280.

Thus, traders can buy the stock on dips between 260 - 254 with a stop loss of 244 for an upside target of 280 in the next 3 – 4 weeks.

IDFC LTD: Buy| LTP Rs 66| Stop Loss Rs 58| Target Rs 78| Upside 18%

In the past year, IDFC Ltd made several attempts to break above the 65 mark, but eventually, it failed. We witnessed a sharp downfall.

This time too, the stock has confirmed a breakout, but it is accompanied by the positive placement of weekly RSI.

Further on the line chart, the stock has confirmed the breakout from the swing high of the year 2016 which indicates more strength.

Traders can buy the stock on dips between 66- 64 with a stop loss of 58 for an upside target of 78 in the next 3 – 5 weeks.

Sun Pharma: Buy| LTP Rs 894| Stop Loss Rs 860| Target Rs 940| Upside 5%

Recently, the stock Sun Pharma confirmed a major breakout above its 52-week high of 871 and that too with exceptional volumes. The stock has been a strong outperformer of the entire pharma pack.

The magnitude of the recent rise indicates that the stock is poised for a fresh upside. Thus, traders can buy the stock near 890 with a stop loss of 860 for an upside target of 940 in 3 – 5 weeks.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)