On the technical front, we feel that the 18,800-19,000 levels are achievable once the Nifty50 closes above the 18,300-mark, and on the downside, major supports are placed at 18,000 – 17,800, Mehul Kothari, AVP – Technical Research at AnandRathi – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts: 

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Q) The D-Street hits a rough patch as both the Sensex and the Nifty retreat after touching record highs. What led to the price action?

A) The recent correction was mostly seen because of broad profit booking. However, we are of the opinion that the larger picture is bullish from here on.

Thus, investors should approach buy on dips strategy. Short-term traders can wait and watch for some time and again hop on to their long traders once there is a confirmation of the short-term bottom.

Q) The next big question which investors would have is – have we hit a top? If not, any signs which investors should watch out for?
 
A) The market is primarily in an uptrend and such minor correction should be treated as a healthy opportunity for those who were left behind on the sidelines in the rally.

Well, with the way bulls are unleashed, now a day nothing seems to be impossible for our equity market. But, on the technical front, we feel that the 18,800-19,000 levels are achievable once the Nifty50 closes above the 18,300-mark.

This is because above 18,300, the index will confirm another short-term bottom. On the downside, major supports are placed at 18,000-17,800.

Q) The momentum on the D-Street slows down ahead of Diwali. Do you think the bulls could bounce back and take the market to record highs? What are the key levels to watch out for on the Nifty and the Nifty Bank?

A) The auspicious occasion of Diwali, where we pray to Lord Laxmi for our wealth maximization, we have a bullish stance wherein any dip in the benchmark index could be utilized by the bulls.

On the technical front, 17800 is the crucial support zone for the Nifty50, and closure above 18300 could again trigger a positive momentum in the market.

For the BankNifty, which is the major contributor in setting up the bullish sentiment, looks lucrative wherein, the immediate support is pegged around the 39000-mark, follower by 38500 and on the higher side the 42000-mark is pertaining to be achievable in near future.

Q) Sectorally, banking and financial service managed to outperform. What led to the price action – is it because of commentary from Moody’s and privatization hopes?

A) The quarterly earnings and expectation from the economic-linked sector, which has even been backed by the government under regular scrutiny, has made the BFSI sector to outperform.

However, if we look at the long-term chart of the Nifty Bank index then we can conclude that the index is hovering near the major hurdle formed by a rising trend line.

This trend line is formed by joining the significant tops of years 2008, 2015, and 2018. Once that is surpassed then we could expect a faster momentum in the Nifty Bank index.

The realty sector has surged over 30 per cent in the last month, some corrections cannot be ruled out in the near terms, but the overall stance remains to be on the bullish side as a major and long-awaited consolidation breakout is seen in the index.

Q) How can investors limit the downside? We know that VIX has gone up, and there is a possibility of further consolidation. Should investors focus on avoiding leverage, maintaining stop loss, etc. What are the other measures?

A) India VIX has seen a significant splurge in the last trading week and the repercussions have been seen in our domestic market. No doubt, it is a cautious sign for the market, where we have seen a huge rally.

In such market conditions, it is better to stay stock selective and should keep a regular watch on the portfolio.

Sectoral distribution has been seen in the last couple of weeks and major focus should be given to the stock-specific front and even better to keep some cash handy to utilize when it's time.

Q) Your top 3-5 trading ideas for the expiry week with a holding period of 3-4 weeks?

A) Here is a list of top trading ideas -

Axis Bank: Buy Above 828| LTP: Rs 816| Stop Loss: Rs 790| Target: Rs 910| Upside 10%

The Nifty Bank index has been an outperformer for quite a few sessions. Axis Bank is on the verge of a multi-year breakout.

The breakout will get confirmed above the Rs 828-mark and once that is taken out we expect a fast upside momentum in the stock.

Traders are advised to buy the stock above Rs 828 with a stop loss of Rs 790 for an upside target of Rs 910 in the coming 3-5 weeks.

IDFC First Bank: Buy| LTP: Rs 50| Stop Loss: Rs 45| Target: Rs 60| Upside 20%

After a sharp fall from the top of 69, the stock took a U-Turn from the support of 40, which was the placement of 200-week’s EMA. After that, the stock has confirmed a falling trend line breakout above Rs 50 mark.

The stock has a placement of 200-DEMA at 52 and above that, we expect a sharp upside in the counter. Traders are advised to buy the stock near 50 with a stop loss of 45 for the upside potential target of 60 in the next 3-5 weeks.

PC Jeweller: Buy above Rs 29| LTP: Rs 28.2| Stop Loss: Rs 26| Target: Rs 35| Upside 20%

PC Jeweller has recently confirmed a range breakout above 27 and rallied towards the Rs 31-mark. Due to the ongoing profit booking in the market, the stock has again retested the breakout zone.

At this point, the risk-to-reward ratio looks lucrative to go long. Traders can buy the stock above 29 with a stop loss of 26 for an upside target of 35 in the next 3-5 weeks.

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