We would rather consider this as not so volatile week. The index remained within a range of 200 points which is by far a thinner range for the Nifty. Yes, we would agree on the point that we are in a ‘Sell on rise’ kind of market, says Sameet Chavan of Angel Broking.
We continue to remain cautious on the market but ideally we would be convinced to go short only after seeing few days of more such time-correction or a relief rally to retest the higher range of 10640, Sameet Chavan, Chief Analyst- Technical & Derivatives, Angel Broking Pvt Ltd, said in an interview to Moneycontrol's Kshitij Anand.
Q) It was a volatile week for Indian markets. There was one thing which was clearly visible that we are in sell on rallies kind of market. How is the coming week expected to pan out for investors?
A) We would rather consider this as not so volatile week. The index remained within a range of 200 points which is by far a thinner range for the Nifty. Yes, we would agree on the point that we are in a ‘Sell on rise’ kind of market.
But, last three days small correction has nothing to with this opinion as we interpret this correction just as a part of the recent consolidation phase.
With a slightly broader view, we can see a ‘Bearish Engulfing’ pattern, formed at the end of the Budget week. We have already seen a small consequence of this pattern but the real impact is yet to be witnessed.
Q) How are FIIs positioned in the markets? They have already sold over Rs10,000 crore in the Indian market in Feb as per provisional data.
A) FIIs have been a relentless seller in cash market since August 2017, except January 2018 during which we saw a sudden jump in the market from 10400 towards 11100.
In February 2018, they once again turned sellers and probably this was the main reason why we saw strong selloff in some of the heavyweight index constituents like HDFC Twins, Larsen & Toubro and ICICI Bank.
On the future index front also, they turned net sellers last month and as a result of their ‘Long Short Ratio’ plunged drastically below the 50% mark from the previous figure of 80% at the end of the series.
Q) What should be the ideal strategy for mid & small caps post Budget which is attracting some bit of selling pressure?
A) The Mid and Smallcap indices had shown topping out formations couple of weeks ahead of the ‘Union Budget’ and in fact, the selling intensified as the marquee heavyweights started correcting post the event.
Due to the recent buying from DIIs, the fall got arrested and we saw some relief rally in the Midcap counters.
But, looking at the higher degree chart, this breather seems temporary in nature and hence, one needs to be very agile while trading these mid and smallcap names. Ideally, one should remain light and start booking profits in the ongoing move.
Q) What should be the strategy -- buy on dips or sell on rallies in the coming week?
A) For the coming week, we are keeping a close eye on 10400. A sustainable breach below this crucial support would result in a sharp correction towards 10300 followed by 10140.
With a near-term view, we continue to remain cautious on the market but ideally, we would be convinced to go short only after seeing few days of more such time-correction or a relief rally to retest the higher range of 10640.
Probably, the first half of the forthcoming week would unfold this suspense and would make the picture slightly understandable.
Q) Top 3-5 stocks which are looking attractive at current levels based on technical?
A) We like MCX, Indigo and Syndicate Bank for next few days. However, on the short side, Metal names like, SAIL and Tata Steel looks a bit weak along with media heavyweight ‘Zee’, which is poised for a further correction.
