By Tejas Shah
The Nifty lost 116 points more than the prior week to close at 15,683. It began on a positive note thinking about worldwide cues last week but couldn’t sustain and cross 15,900 levels and fresh promoting was witnessed towards the middle of the week, exactly where the bears took manage of the markets. The second half of the last week was quite volatile and there was a sharp recovery from the big help zone of 15,550-600 towards the finish of the week ie on Friday.
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The candlestick (Hammer) pattern formed on the every day chart is an encouraging one. It was a volatile week just after a positive opening and neither the bulls nor the bears wanted to give up. The positive crucial take away for nifty is that it is holding above the big help level of 15,600 on a closing basis.
The Nifty Small Cap one hundred Index hit a new lifetime higher (9,824) through the last week. The market place breadth remained weak through Friday’s trading session as 33 of 50 stocks in the Nifty declined. The broader market place fairly underperformed through the last week as Nifty Midcap one hundred and Nifty Small cap one hundred indices lost 3.05% and 1.81% respectively. Volatility elevated a bit. India VIX climbed 4.93% to 14.80 on a weekly closing basis.
Presently, the Nifty Index is respecting each the help and resistance levels. The Nifty is nonetheless forming greater tops and greater bottoms each on the every day and weekly charts, which is a positive signal as per Dow Theory. The bulls are in complete manage of the markets at the existing juncture and are applying each and every dip to develop lengthy positions. The brief term moving averages are beneath the price tag action and ought to continue to help the indices on any decline. The Nifty is trading about a make or break help zone of 15,550 to 15,600 levels and a sharp movement of 2% to 3% can be anticipated on either side from this zone, preferably on the greater side.
The outlook for Nifty remains positive from the brief term viewpoint till the time the help levels are not breached on the downside. The levels of 15,600 and 15,450 are brief-term supports. These help levels can be applied as a strict cease loss for current lengthy positions. On the greater side, quick resistance for Nifty is at 15,800 levels and the next big resistance zone is at 16,000-one hundred levels.
Bank Nifty technical outlook
The Bank Nifty was an underperforming sector and it was also partially accountable for dragging Nifty decrease through the last week. The Bank nifty is not permitting the market place to go greater and any every day / weekly closing beneath 33,500-600 levels will indicate additional weakness in Bank Nifty. We will need to see more firmness in Bank nifty for additional strength in Nifty.
On the downside, quick help zone for Bank Nifty is at 33,900-34,000 levels and the next big help zone lies at 33,500-600 levels. The help zone of 33,500 to 33,600 holds a lot of significance considering that numerous technical research and indicators are suggesting this location as a quite sturdy help zone in terms of ST Moving typical help, Breakout Candle low, Fibonacci Retracement Levels and so on. (61.80% Fibonacci retracement level of the whole rise beginning from 32,115 levels (14th May low) to 35,811 levels (4th June High) on the every day chart). On the greater side, quick resistance zone for Bank Nifty is at 35,300-500 and the next resistance zone is at 36,400-500 levels. Broadly, Bank Nifty is trading in the variety of 34,000 to 35,800 levels for the previous 4 weeks just after the positive breakout which took spot above 34,one hundred-300 levels in the month of May 2021.
The Banking index has been quite variety-bound in the current previous (4 weeks) but is now setting up for a monster move. We are of the opinion that unless and till the Bank Nifty does not close beneath the level of 33,500, the outlook remains positive from the brief term viewpoint.
Reliance Industries in focus
The AGM of the index giant Reliance Industries Ltd. (RIL) is scheduled for the 24th of June that will maintain the traders and market place excited about the outcome. Technically, the outlook for RIL is positive considering that the stock is forming greater tops and greater bottoms on the every day chart and it is also trading above brief term and lengthy term moving averages. Any outcome in terms of positive outcome or announcements can take the stock greater and will also give help to the market place considering that it is an index heavyweight.
The Technology, FMCG, Banking and Pharma sectors are most likely to outperform.
Stock picks
Glenmark Pharma Ltd.
Buying can be initiated in Glenmark Pharma Ltd. at CMP (640) for the upside Target 1 of Rs. 675 and Target 2 of Rs. 705 in the next 8 -10 sessions. Place a cease loss of Rs. 619.
Tata Power Ltd.
Buying can be initiated in Tata Power Ltd.at CMP (121) for the upside Target 1 of Rs. 135 and Target 2 of Rs. 150 in the next 4 -6 weeks. Place a cease loss of Rs. 114.
Ultratech Cement Ltd.
Buy only on a move above 6755 with a cease loss beneath 6550 for a brief term target of 6975 and 7150. (Conditional Call)
(Tejas Shah is the AVP & Technical Analyst at JM Financial Services. Views expressed are the author’s personal. Please seek advice from your monetary advisor just before investing.)