“Directional indicators and most oscillators are pointing to strength and continuation of the uptrend. However, fast stochastics are turning down, suggesting volatility in the coming days,” he said.
Edited excerpts from the chat:
How strong was Friday’s downside momentum for Nifty traders and do you think 25,000 will be the biggest resistance point?
The broader market, represented by the Nifty 500, showed signs of distribution throughout the last week, flattening out gains even as the Nifty continued to rise towards 25000 on a daily basis.This divergence between the broader market and the benchmark indices came to a head on Thursday when profit booking began as the Nifty opened gapping up above 25000 and, although it did not extend much, it showed enough signs of exhaustion in bullishness to eventually open gapping down on Friday.
Ideally, the move should soon take us to 24,400-330, but with directional indicators yet to show any momentum and 49.6% of Nifty 500 stocks still trading above their 10-day SMAs, the next downside may require a period of consolidation initially. The congestion band at 24,850 should resist most of the upside, while a direct surge above 24,940 could put the Nifty back on track towards 25,800. For now, prospects for the same seem limited, but still, one can plan for it, especially if the current decline fails to cross the 68.2 Fib level of the recent high-low at 24,540.
How should you proceed with trading Nifty Bank and what are the key levels to watch out for?
Large banks ICICI Bank, SBI, Axis Bank and Kotak Bank, which account for around 57% of the index, are weak on the weekly chart with the weekly MACD showing signs of a break for SBI and Axis. HDFC Bank, which alone accounts for 30% of the Nifty Bank Index, is looking bullish on both the daily and monthly charts and could support the index. However, overall, only 25% of the index constituents are trading above their respective 10-day SMAs, suggesting that the weakness has already begun.
While this suggests that bargain hunting cannot be ruled out, the close approach to 50,700, where the recent weakness was reversed, suggests the possibility of a further sharp drop to 48,000, which justifies placing protective stops on long positions at 50,700.
Zomato was one of the biggest gainers this week, rising around 17% on optimistic outlook for its Q1 earnings. Do you see the upward momentum sustaining in the coming week? Any targets for short-term traders?
Directional indicators and most of the oscillators are pointing to strength and continuation of the uptrend. However, fast stochastics have turned down, suggesting volatility in the coming days, though traders may continue to target Rs 292 in the short term with stop losses at either Rs 252 or Rs 240.
Nifty CPSE index was the top gainer among sectors. Where do you think state-run companies like NTPC and Coal India are headed?
Last week’s dip has given further impetus to the rally, helped by NTPC and Coal India.It could be a tug of war between the five biggest stocks in the index.Of the five biggest stocks in the Nifty CPSE index – Powergrid, NTPC and Coal India – which account for 50% of the index – are looking strong and could be a further positive.
However, ONGC and BEL, which together contribute around 30% to the index, have seen weekly shooting star candles and weekly MACD signal breaks, respectively, which may weaken the upside prospects for the index. The key support for the index is seen around 7,280 and 7,131 levels.
Tell us your best idea this week!
Buy Delhivery (CMP: Rs 416)
Target: 455 rupees
Stop Loss: Rs 389
After moving within a wedge pattern since January 2024, the stock bounced off the pattern support at Rs 365 last month and a pullback is underway. The weekly MACD is trying 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 coming weeks. All longs may be protected with stop losses below Rs 389.
Buy Hindustan Copper (CMP: Rs 310)
Target: 345 rupees
Stop Loss: Rs 294
The stock, which has been in profit-taking mode since April 2024, appears to have bottomed near the 61.8% Fib retracement level of 301 (March 2024 low and May 2024 high). The MACD histogram on the weekly chart has started flattening, suggesting exhaustion. We expect the stock to move towards Rs 345 in the coming weeks. All longs can be protected with stop losses below the 294 level.
