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The market is poised to continue its upward momentum, with potential retesting of the next psychological resistance level at 20,000. Technical analysts emphasise the critical importance of Nifty maintaining its position above 19,400. Nifty recorded a 1.73% gain last week, closing at 19,732. Analyst recommendations for trading include stocks such as HCLTech, CESC, Jindal Stainless, Aurobindo Pharma, Dr Reddy’s, NMDC, and Cyient.


Where is the Nifty headed?
In the short term, the index will be considered in a bullish zone if it stays above 19,500. Fresh momentum can be expected above 19,870. The broader view for the market is that it seems to be range-bound between 19,500 and 19,900. On the other hand, Bank Nifty was down by 1%, resulting in a 2% underperformance last week. Bank Nifty faced resistance at 44,500 but has support at 43,400 levels. Moving below 43,400 can lead to further pain up to 42,500 levels. The view for Bank Nifty is sideways to negative.

What should investors do?
From a strategic index perspective, Nifty Smallcap, Nifty Alpha 50, and Microcaps are in strong movement. Nifty Pharma has hit an all-time high level after 70 days of consolidation, indicating a bullish continuation sign. Nifty IT was the top gainer last week, forming a strong bullish reversal pattern. The two sectors seem to be the flavour of the market. Moreover, the leading cement stock has displayed a bullish continuation sign. Some of the potential stocks with a bullish structure include Jindal Stainless, Aurobindo Pharma, Dr Reddy’s, and GMR Infra. However, a bearish setup has been observed in Bandhan Bank.ARPAN SHAH

Where is the Nifty headed?
Nifty closed at the lowest point in the October series, but it made a smart recovery in the November series to 19,875. Technically, 19,850-19,900 is a strong resistance zone for Nifty, and a breakout above this zone will take it to new alltime highs. On the derivatives front, the FIIs’ index future net long exposure was 10.9% at the end of October expiry. In the coming days, FIIs might cover their short positions as they are still 80% short, and we can witness a short covering rally from current levels. So, any dip in the index towards 19,500 is a buying opportunity. Bank Nifty has underperformed the benchmark index in the November series, and it will continue this underperformance till it doesn’t cross above the resistance level of 44,500.

What should investors do?
The IT sector has given strong support to the market in the recent rally, and it will continue to outperform in the coming days. HCLTech has given a fresh breakout on the weekly chart, and it can be added on dips. From the smallcaps, Cyient is in the accumulation zone, and it can be added at the current level. CESC from the power sector and Cummins India from the capital goods sector have given fresh breakouts, and investors can add both these stocks at the current level. India Cements and NMDC are likely to witness a short covering rally from the current levels. SRF and PCBL can witness sharp upsides. From the broader market, Dreamfolks Services, Triveni Engg and Landmark Cars are buying opportunities on dips.


Where is the Nifty headed this week?
We believe that as long as Nifty holds above the 19,400 mark, the rally is likely to continue, and it can retest the next psychological resistance level of 20,000 on the higher side. The outlook for Nifty remains positive from the short-term perspective till the time the support levels are not breached on the downside. The levels of 19,625-650 and 19,450-500 are short-term supports. On the higher side, the immediate resistance zone for Nifty is at 19,850 levels, and the next psychological resistance is at the 20,000 mark. Unless and until Bank Nifty closes below the levels of 43,200-300, the outlook for Bank Nifty remains positive from the short-term perspective.

What should investors do?
Traders and investors should look to buy or accumulate Nifty on dips around 19,600-650 levels with a stop loss below the 19,400 mark, targeting 20,000 and 20,222 on the higher side. Options traders can look to initiate a Bull Call Spread with strikes of 19,800 Call and 20,000 Call of November 23 expiry to participate in this up-move. Technology, realty, auto and pharma sectors are likely to outperform.

  • Published On Nov 20, 2023 at 08:20 AM IST

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