Friday, December 27, 2024

Nifty may take a breather, stay in 19,200-19,900: Analysts

Monday, July 31, 2023, 0:44
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Technical charts suggest that markets may remain weak in the short term after a sharp rally. While Nifty is likely to consolidate in the broader range of 19,900-19,200, analysts are watching out for the 19,500 level – a key support for the index. Nifty could fall further if this level is breached. Stocks such as SBI, Adani Ports, Ambuja Cements, BEL, DLF, Tata Power, Escorts, Apollo Hospitals, Cipla, Lupin, ICICI Bank, and Bank of Baroda are likely to outperform the market, said analysts.DHARMESH SHAH HEAD OF TECHNICAL & DERIVATIVE, ICICI SECURITIESWhere is Nifty headed this week? The weekly price action formed an inside bar, indicating a breather after the recent sharp up-move. We expect Nifty to consolidate in the range of 19,900-19,200 with the continuance of stock-specific action. The past 18 week’s spectacular ~19% up-move has pushed weekly and monthly stochastic oscillators into overbought conditions, indicating the possibility of extended consolidation. What should investors do? In a structural bull market secondary corrections are a common phenomenon that make the market healthy. Thereby dips should be utilised as an incremental buying opportunity to ride the next leg of the up-move. Sectorally, BFSI, PSU, pharma, and realty are expected to do well. The pharma index has clocked a fresh all-time high after witnessing a faster pace of retracement, indicating a structural turnaround. We expect pharma to outperform in coming weeks relatively. On the stock front, among largecaps, we prefer SBI, Adani Ports, Ambuja Cements, BEL, DLF, and Sun Pharma; while in mid-cap, Union Bank, Tata Power, Balkrishna Industries, Intellect Design, Escorts, Granules will remain in focus.RAJESH PALVIYA HEAD TECHNICAL DERIVATIVES, AXIS SECURITIESWhere is Nifty headed? Chart pattern suggests that if Nifty crosses and sustains above 19,850, it would witness buying, leading the index towards 20,000- 20,100. However, if the index breaks below 19,500, it would witness selling and move towards 19,400-19,200. Daily and weekly strength indicator RSI indicates a positive bias. What should investors do? Focus on stocks like DLF, Godrej Properties, Apollo Hospitals, Cipla, Lupin, Siemens, Concor, Dabur, Tata Consumer, Indiamart, Tata Power, ICICI Bank, Bank of Baroda on the long side. For traders, we suggest a neutral Short Strangle strategy for weekly expiry of August 10, selling 19,700 Calls and 19,700 Puts one lot each with premium of Rs 141 and Rs 151, respectively, with a total premium inflow (maximum profit) of Rs 14,600 (292 points). As it’s a credit spread, this strategy will generate limited profit from a profit perspective, while the loss can be unlimited in case of a wide movement. It’s advisable to maintain a combined premium stop loss of Rs 430-450.PRITESH MEHTA TECHNICAL ANALYST, YES SECURITIESWhere is Nifty headed? Though double bottom sell is generated on the point-andfigure chart, it continuously trades above the 10-column average and has defended the 19,600 zone since mid-July. Buying opportunities are seen on decline. Only a move below 19,600 would lead to a reversal in the short-term trend. What should investors do? The broader market continues to provide upside opportunities while the benchmark Nifty is consuming time atop, ratio of Midcap 100 vs Nifty has confirmed a base breakout at the top of the trend, trading above the 22nd June peak. Prestige, AB Capital and Torrent Power are witnessing positive follow-through post-bullish anchor columns suggesting an upside of 10-14% in these stocks from the midcaps space. Reversal of the 200- day moving average in Bank Nifty vs Nifty ratio implies underperforms of banks.

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