What do you make of the move that we saw in the Nifty this week?
We saw four or five straight weeks of upmove in price. This was the first week where we saw a mild bit of retracement happening in Indian markets. The damage was more in terms of midcap and stock specific because in terms of index performance, Nifty was down 0.5-0.7 per cent but the midcap index was where most of the losses were.
After five straight weeks of rally, this could be one process of retracement which could go on. It might take a couple of weeks but I would not call it a major trend reversal until and unless the global markets show some big cracks over the next couple of days.
Keeping that apart, I would call it a mild retracement and may be a range-bound action over the next couple of days for the indices to pan out. The action could be more stock specific. The only bright spot which happened last week was the resurgence of Bank Nifty.
In the last 15 days, we have seen that tech has started to outperform and banks have started to underperform. If you exclude just a Yes Bank, do you think that shift is happening now?
In fact, it is a reverse. The IT stocks were seeing some bit of profit booking. Midcap stocks like Hexaware, Mindtree, NIIT Tech saw a bit of retracement in terms of price. Rise in prices of large-cap stocks like Infosys also got arrested but the Bank Nifty rising is a very strong sign, it is everyone knows that Bank Nifty has…
You are talking about the near term. I was talking about the last two-three months.
I was talking about the last one weeks price performance and the relative outperformance of Bank Nifty.
If Bank Nifty moves on a stronger footing, then the chances of Nifty breaking up upside is much higher. IT on the other hand has a negative correlation with Nifty. Look at the price performance in February, March and April. The IT stocks managed to rally but the Nifty did not rally in sync.
It is only that the last four or five weeks that we saw the index picking up pace. If the Bank Nifty emerges as a strong contender in terms of a breakout, the chances of Nifty continuing this five week of rally is much higher.
What are some top trading ideas that you have picked out for our viewers?
There are a couple of stocks which are inching towards a big breakout on their daily as well as medium term charts.
One of them is ICICI Pru. After that big rally that the stock had seen a couple of weeks back, it has gone in a consolidation mode. After this consolidation, the breakout should be on the higher side because the volume accumulation has been extremely strong for ICICI Pru. That is a buy at Rs 480 as a positional target. Stop loss is at Rs 410.
And the second is NCC. After a bit of volatility when it moved in a 3-5% price band, the stock is again inching back towards a swing breakout on the daily weekly charts. Long-term charts were already very positive for NCC. So, that is a short term buy with targets at Rs 140 and stop loss at Rs 128.