Technical indicators suggest a minor oversold condition, potentially leading to a modest rebound this week. However, the overall upward potential appears limited due to the prevailing negative structure with Nifty trading below its 20- and 50-day moving averages, according to technical analysts.
Stocks such as Persistent, Axis Bank, TCS, RIL, SBI Cards, Birla Soft, Canara Bank, Coal India, Bajaj Auto, TVS Motors, Indigo, and Tata Motors can be bought for trading purposes, analysts said.
CHANDAN TAPARIA
ANALYST-DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES
Where is the Nifty headed this week?
After a steep decline last week, Nifty took a breather near the 200-EMA and negated the formation of lower highs – lower lows of the last six trading sessions. Most indicators indicate a slightly oversold scenario, which may provide some bounce. Still, the overall upside seems capped as the structure could remain negative trading below 20- and 50-day EMAs. Nifty formed a bullish candle on the daily frame and a bearish candle with a longer lower shadow on the weekly frame. It has to hold a recent swing low and a key support of 18,888 for a bounce towards 19,250-19,350 before it starts the next leg of decline. A failed attempt to surpass the immediate hurdle and a decisive hold below 18,888 could open the downside towards 18,500.
What should investors do?
Volatility has not spiked much even after the correction last week, which is not creating major panic in the market even after the weakness in global indices as well. Sector-wise bullish setup is seen in selective IT, auto and PSU banks; while most other sectorial indices are weak. Positive setup are seen in Trent, Persistent, Axis Bank, Birla Soft, Canara Bank, Coal India, Bajaj Auto, TVS Motors, Indigo, and Tata Motors.
JATIN GEDIA
TECHNICAL RESEARCH ANALYST, SHAREKHAN
Where is the Nifty headed this week?
This week, we expect a pullback in Nifty towards 19,160 – 19,220, where multiple resistances in the form of Fibonacci retracement levels and the 40-hour moving average are placed. On the way down, a breach below 18,900 can lead to a slide towards 18,500. However, the probability tilts favour a consolidation between 18,960 and 19,220 with a positive bias during the week. Bank Nifty witnessed a breakdown of the double top pattern, for a potential downside till 41,000 – 40,900 from a short-term perspective. Considering the sharp decline during the previous week, an immediate breakdown appears highly unlikely, and we expect a relief rally towards the 43,000 – 43,200 before the next leg of decline.
What should investors do?
The time is ripe to build a portfolio as the correction provides excellent entry in some of the heavyweights like Reliance, HDFC Bank, Asian Paints, Hindustan Unilever, Kotak Mahindra Bank and TCS. Deploy at least 30% of the capital at current levels. For trading, buy ICICI Pru at Rs 519 with a stop loss of Rs 510 for a target of Rs 543–555. Buy SBI Cards at Rs 790 with a stop loss of Rs 770 for Rs 816–830 target. Buy Coal India at `314 with a stop loss of `308 for a target of Rs 328–333.
NAGARAJ SHETTI
SENIOR TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
Where is the Nifty heading this week?
After showing sharp weakness in the previous three sessions, Nifty witnessed a sustainable upside bounce on Friday. A long bull candle was formed on the daily chart with a gap-up opening. Technically, this pattern indicates a shortterm bottom reversal for Nifty. Friday’s unfilled opening upside gap could now be considered a bullish breakaway. If the gap remains open for the subsequent 1-2 sessions, one may expect more upside ahead. The short-term trend of Nifty seems to have reversed, and further up-move could be considered a key bottom reversal. Nifty is likely to move up towards the next overhead resistance of 19,250. Any weakness is expected to find support at 18,850.
What should investors do?
The near-term weakness seems over, and the market is poised for an upside bounce. One may create longs in Nifty and selective stocks for an upside bounce towards immediate index resistance. Look to cut the shorts on Nifty breaking above the hurdle of 19,250. A sharp move below 18,800 could be an opportunity to create aggressive shorts. Financials, PSE, PSU banking, oil & gas and realty sectors could outperform in the short term. Stocks with positive bias: Axis Bank, SBI, Canara Bank, Reliance, DLF, PNB, Coal India and Shriram Finance.
