“Directional moving indicators and most oscillators point to strength and continuation of the uptrend. Fast stochastics have turned lower though, indicating volatility in the next few days,” he says.
Edited excerpts from a chat:
How strong was Friday’s downside momentum for Nifty traders and do you think 25,000 is the biggest resistance point?
The broader market, represented by the Nifty 500, was showing signs of distribution all through last week with gains becoming flatter, even as Nifty kept advancing towards 25,000 every day. This divergence between the broader market and the benchmark index came to a head on Thursday, as Nifty’s gapped-up opening above 25,000 initiated a profit booking, which even while not stretching much, gave enough signs of bullish exhaustion that would eventually force a gapped-down opening on Friday.
Ideally, this move should see 24,400-330 right away, but directional moving indicators are yet to signal momentum, and 49.6% of Nifty 500 stocks are still above 10-day SMA, suggesting that the next leg of downsides may require a period of consolidation initially. The congestion band at 24,850 should resist most upsides, but a direct rise above 24,940 could put Nifty back on to the 25,800 trajectory.Its prospects of the same look limited for now, but may nevertheless be planned for, especially if the present downsides do not stretch beyond the 68.2 fibo of the recent high-low at 24,540.
How would you go about trading Nifty Bank? What are the key levels to watch out for?
The index biggies, ICICI Bank, SBI, Axis Bank, and Kotak Bank which together form around 57% of the index, look weak in weekly charts with weekly MACD signals a break seen in SBI and Axis. HDFC Bank which alone contributes 30% to the Nifty Bank index looks positive in daily as well as monthly charts and can lend support to the index.However, in all, only 25% of the index constituents are above their respective 10-day SMA, suggesting that a weakness has already set in.
While this suggests that bargain hunting cannot be ruled out, the proximity of 50,700, from around which a recent weakness was reversed, points to the potential for a deeper plunge to 48,000. This warrants protective stops for longs at 50,700.
Zomato was one the biggest gainers in the week by rallying around 17% amid optimism around Q1 results. Do you see the upside momentum sustaining in the week ahead? Any targets for short-term traders?
Directional moving indicators and most oscillators point to strength and continuation of uptrend. Fast stochastics have turned lower though, indicating volatility in the next few days, but traders may continue eying Rs 292 in the near term, with stop loss at either Rs 252 or Rs 240.
Nifty CPSE index was among the top sectoral gainers. Where do you think PSUs like NTPC and Coal India are headed?
Last week’s pullback added another leg to the upside with support from NTPC and Coal India. IT could be a tug of war between the big five stocks in the index. Among the big five in the Nifty CPSE index in terms of weightage, Powergrid, NTPC, and Coal India, which form 50% of the index, look positive and could add to the positivity.
However, ONGC and BEL, which together contribute close to 30% to the index, have seen a weekly Shooting Star candle and a weekly MACD signal break respectively, which may dampen the upside prospects of the index. Key support for the index is seen around 7,280 and 7,131 levels.
Give us your top ideas for the week:
Buy Delhivery (CMP: Rs 416)
Target: Rs 455
Stop loss: Rs 389
After moving within a Wedge pattern since January 2024, the stock has bounced off the pattern support of Rs 365 last month and a pullback is underway. The weekly MACD is about to cross the signal line and the weekly RSI is hovering above 50, indicating strength. We expect the stock to move towards Rs 455 in the next few weeks. All longs may be protected with a stop loss placed below Rs 389.
Buy Hindustan Copper (CMP: Rs 310)
Target: Rs 345
Stop loss: Rs 294
After being in a profit booking mode since April 2024, the stock seems to have found a base near the 61.8% Fibonacci retracement level of 301 (March 2024 low and May 2024 high). MACD histograms in weekly charts have started to flatten hinting at exhaustion. We expect the stock to move towards Rs 345 in the next few weeks. All longs may be protected with a stop loss below 294 levels.
