Nifty is expected to trade in the range of 10,500-11,000 for the May series with mixed bias, despite the outcome of the state elections in Karnataka, according to technical analysts. Metals, private banks, oil & gas and IT sectors are expected to show some strength in coming weeks, they said.
HEAD–TECHNICAL, AXIS SECURITIES
Where we are? Nifty 11,000 strike price is having highest open interest addition which is likely to act as hurdle, but any positive surprise from Karnataka assembly election front can reclaim Nifty above 11,000 level which may cause short covering action in market leading it to new high in coming days; in case of any negative surprise from election then we may see corrective action taking Nifty to the levels of 10,550-10,400 over coming weeks.
What is in Store? On the weekly chart, the index has formed long bullish candle; the index has retraced and closed above 61.82 per cent Fibonacci retracement levels of the previous down fall (11,171-9,952) which signals bullish sentiments ahead. Nifty has managed to fill the bearish gap area (10,738-10,705) created in February which indicates strength ahead. The chart suggests that if Nifty crosses and sustains above 10,840 levels then it would witness buying thus leading the index towards 10,950-11,000 levels which is likely to act as stiff resistance in near/short term. Nifty is expected to trade in range of 10,500-11,000 for May series with mixed bias, despite any election outcome.
What Should Investors do ? On the daily chart, Nifty is trading above its 20 DMA (10,640) which indicates positive bias in near term. The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating sustained uptrend. Nifty continues to remain in an uptrend for near term. However, if Nifty breaks below 10,700 level it would witness some profit booking which would take the index towards 10,600-10,550 levels. We expect 11,000 is likely to act as tough and stiff resistance for short term. We advise to book profits on the higher side. Metals, private banks, oil & gas and IT sectors are expected to show some strength in coming weeks.
HEAD OF RESEARCH, IDBI CAPITAL MARKETS & SECURITIES
Where are we? The market has recovered from low of 9,951 to 10,812 a recovery which was larger than my expectation. As Nifty has crossed 10,300 which was important level given last time report, Nifty has to cross 10,885 to assume medium-term correction is out of the way and we can see 11,300 and 11,800. Nifty below 10,590 only caution 50-DMA at 10422 are also important levels to watch. If Nifty doesnt cross 10,890 and trades below 10,590, then I would assume pullback rally is over and fresh correction is starting towards 10,100 and 9,700.
What is in store? This is a difficult is advised. Nifty 200-DMA at 10,304 and market where only winners are gaining while weaker stocks are only eroding wealth. While winners trade at very high valuation with a very low margin of safety but SIP in these stocks work better. Titan, TCS, Tata Elxsi, HDFC Life, Cholamandalam Finance, Ashok Leyland, Bata India, and Trent are few stocks in the above bracket; retail is the story which is having good demand.
What could investors do? An investor having cash level, 30-40 per cent would be ideal, buy frontline quality stocks as high crude price plus high commodity prices would have an impact on Indian market at a certain point in time. We like Cyient, M&M Forging, Muthoot Finance, Manappuram, Abbott, Future Lifestyle Fashions, Future Retail, Visaka Industries, and Reliance for the long-term investor. The next 6-8months can be uncertain period due to elections but by 2020 end, Nifty is likely to target 14,500-15,000 so short-term pain with long-term gain.