RAHUL SHARMA
HEAD- TECHNICAL & DERIVATIVE RESEARCH, JM FINANCIAL SERVICES
Where is the Nifty headed this week?
US Markets are in oversold territory, and European indices have taken support near crucial moving averages, which mean a meaningful recovery can be expected from global equity markets. The ratio chart of the Nifty 500 vs S&P 500 has closed at the highest level since mid-January. Nifty and Nifty Bank formed hammer candles on weekly charts due to the recovery seen in Friday’s session which is a bullish development. Nifty 500 is relatively much stronger this time as it managed to form a relatively higher low as compared to the March correction. Nifty PCR has improved in the last two sessions, supplementing the bullish bias. Retail has lapped up longs in index futures. FIIs are decisively short on index futures. Expect Nifty to scale higher as follow-up buying can emerge above 22,180 and shorts can get challenged above 22,425.
What should an investor do?
One Look to add longs in Nifty above 22,180 for targets of 22,325 and 22,425 with a stop loss of 22,100. Relative strength studies indicate that Eicher Motors can outperform. Targets are seen at Rs 4,500/4,800. Stop loss should be at Rs 4,193. Maruti has seen a firm close on Friday above key resistance levels. Upside targets are seen at Rs 13,000/13,200. Stop loss should be at Rs 12,450. A higher-high and higher-low structure in HAL is intact inspite of market volatility. Expect the stock to test Rs 3,900/4,000. Stop loss should be at Rs 3,620.
DHARMESH SHAH
HEAD OF TECHNICALS, ICICI SECURITIES
Where is the Nifty headed this week?
Nifty made a smart recovery on Friday to end the volatile week off lows, as buying emerged near key support and March lows of 21,700, despite weak sentiments, as prices approached oversold readings. This week, Nifty holding Friday’s panic low of 21,700 will keep pullback options open, followed by a gradual recovery towards last week’s high of 22,400, which remains an important resistance. Meanwhile, stock-specific action will be in focus amid the progression of Q4 earnings. A key observation has been that Nifty’s two corrections since January 2024 have been 5% each, and even last week the index maintained this price behaviour by recovering post 5% correction from life highs and held the lower band of the past three-month rising channel, despite geopolitical worries. What should an investor do?
Bouts of volatility amid geopolitical tensions, earnings and elections could not be ruled out. However, investors should not panic and continue to invest in good companies during episodes of volatility. We reiterate our structurally positive stance, as we have seen in the past that once anxiety around such events settle down, markets tend to resume their primary up-trend. In large caps, we prefer Reliance Industries, SBI, Hindalco, Petronet LNG, Tata Power, HAL, and M&M; while in midcaps, Jindal Steel and Power, Delivery, Bharat Dynamics, Lemon Tree, and Graphite India are looking good
NAGARAJ SHETTI
SENIOR TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
Where is the Nifty headed this week?
After showing a panic selloff from near the day’s high on Thursday, Nifty witnessed an excellent recovery on Friday and closed the day with handsome gains amidst high volatility. A long bull candle was formed on the daily chart after opening at the lows. The present chart pattern indicates the formation of a Bullish Piercing line-type candle pattern. This signals a short term bottom reversal for the market. Nifty held above the support around 21,750, which is near the previous swing low of March 20. This could be considered a double-bottom type formation. After breaking below the support of the lower end of the channel at 22,000, Nifty regained the lost ground and closed above the support on Friday.
What should an investor do?
The short-term trend of Nifty has reversed with the formation of a bullish reversal pattern. One may expect further upside towards the next resistance of 22,500 in the next few sessions. Immediate support is at 22,000. One may look to start accumulating index or stocks by placing appropriate stop losses. Stocks with positive bias include Tata Steel, SAIL, SBI, Central Bank, Motherson, M&M, Gujarat Fluorochemicals, Raymond, Chalet Hotel and Bajaj Finance.