By Dharmesh Shah
Equity benchmarks snapped the previous two weeks’ winning streak amid volatile international cues. The Nifty concluded the week on a subdued note at 14678, down 1%. The Nifty midcap lost .7% when tiny-cap gained .3%. Sectorally, pharma, FMCG and PSE outshone when metal, IT underwent profit-booking.
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Nifty technical outlook
– The weekly value action formed a bear candle carrying greater higher-low, indicating breather right after the previous two weeks’ rally. In the procedure, stock certain action prevailed as the broader marketplace comparatively outperformed.
– The lack of quicker retracement on either side signifies extended consolidation (14900-14400) in coming weeks amid stock certain action that would assistance index to type a greater base. Meanwhile, our medium term view of 15400 remains intact. Hence, traders can use bouts of volatility to their benefit to create lengthy positions by accumulating excellent substantial cap and midcap stocks amid progression of Q4FY21 earning season.
– Sectorally, BFSI, Infra and Consumption provide favourable threat-reward setup, when profit booking in Metal stocks right after a sharp rally presents fresh entry chance
– Our preferred substantial caps are HDFC, Reliance Industries Ltd (RIL), Titan Company, Berger Paints, Tata Motors, SAIL when Bata India, Ipca Laboratories, Astral, SKF India, KNR Constructions, Dhanuka Agritech, Gujarat Pipavav Port Ltd (GPPL), Phillips Carbon Black are preferred inside midcap space
– In line with our view, the Nifty midcap and tiny cap indices displayed inherent strength and scaled to fresh 52-weeks higher in spite of minor profit booking in the benchmark. Going ahead, we anticipate broader markets to sustain its relative positive value structure against benchmark
– Structurally, we do not anticipate the index to breach the important help threshold of 14200. Despite elevated volatility owing to concern more than second Covid-19 wave, it has managed to hold the important help of 14200 and formed a greater base. Hence 14200 would continue to act as a important help as it is confluence of:
a) one hundred days EMA placed at 14300
b) last month’s low placed at 14151
Bank Nifty outlook
– The Index snapped two weeks up move and closed the week down by more than 2%. The weekly value action formed a bear candle which mainly remained inside earlier week higher-low variety signalling consolidation and lack of adhere to via to earlier two weeks up move
– Going ahead, we anticipate the index to continue with its last two weeks consolidation with positive bias in the broad variety of 31500-33300. The lack of quicker retracement on either side signifies extended consolidation that would assistance the index to type a greater base.
– The index has quick help at 32000-31500 levels being the confluence of the last two weeks low and the 61.8% retracement of the earlier up move (30405-34287).
– The index has maintained the rhythm of not correcting more than 20% as witnessed because March 2020. In the existing situation, it rebounded right after correcting 19% from the all-time higher (37708). Hence it offers favourable threat-reward setup for the next leg of up move
– Structurally, we do not anticipate the index to breach the important help threshold of 30000-30500. Despite elevated volatility owing to concern more than second Covid-19 wave, it has managed to hold the important help of 30500 and formed a greater base. Hence 30500-30000 would continue to act as a important help as it is confluence of:
a. 200 days EMA placed at 30259
b. last month’s low placed at 30405
c. Price equality with the two main decline in the last 14 months from the all-time higher (37708) also highlights main help about 30000 levels
– Among the oscillators, the weekly stochastic remains in uptrend and is seen oscillating about the neutral reading of 50 indicating consolidation with positive bias in the coming weeks
(Dharmesh Shah is the Head – Technical at ICICI Direct. Please seek advice from your economic advisor just before investing.)
ICICI Securities Limited is a SEBI registered Research Analyst obtaining registration no. INH000000990. It is confirmed that the Research Analyst or his relatives or I-Sec do not have actual/advantageous ownership of 1% or more securities of the topic firm, at the finish of 22/04/2021 or have no other economic interest and do not have any material conflict of interest. I-Sec or its associates could have received any compensation towards merchant banking/ broking services from the topic firms described as consumers in preceding 12 months