Things are looking positive for the next week and we should not ignore the fact that this entire upswing from the lows of 11,250 is driven by some positive expectations from this sudden decision of ‘weekend meeting on the economy’, says Mazhar Mohammad of Chartviewindia.in.
Technically speaking, if market sustains above Friday’s gap zone of 11,430 – 11,380 levels then it should remain positive with an initial target of 11,650, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, said in an interview with Moneycontrol’s Kshitij Anand.
Q) After a volatile week for equity markets which closed negative, what is the outlook for the index for the coming week?A) Albeit, in isolation, things are looking positive for the next week and we should not ignore the fact that this entire upswing from the lows of 11,250 is driven by some positive expectations from this sudden decision of ‘weekend meeting on the economy’.
Hence, this entire rally can just be on the back of a massive short covering. The strength in this leg of upswing will be known only post Monday’s price action.
In case the outcome of the meeting doesn’t match the expectations of market participants then resumption of downswing can’t be ruled out.
Technically speaking, if market sustains above Friday’s gap zone of 11,430 – 11,380 levels then it should remain positive with an initial target of 11,650.
Again the big question remains whether this upmove from the lows of 11,250 is a fresh leg of an uptrend or a counter-trend rally which will be clear only with retrospective effect and the strength with which we can move ahead will throw more clues in this regard.
As the long-term trends are bullish this correction has to end at some point in time. It may end on Monday or after a couple of weeks, but eventually, a fresh breakout beyond 11,760 shall open-up targets placed around 12,500 kinds of levels.
As of now further downsides, if any, below 11,250, shall get curtailed in the zone of 11,100 – 11,050 levels.
Q) How is Nifty Bank looking on weekly as well as daily charts?
A) At a recent low of 26,555 Bank Nifty almost tested its critical support on the long-term charts whose value is placed at 26,530 levels.
In case if this critical level is breached then bears can make a decent buck out of this breakdown as downsides shall get extended up to 25,590 levels which is like our worst case target for this index.
In simple words, it has to bottom out between 26,555 – 26,530 levels or extend its corrective swing towards 25,590 to hit a bottom.
On the daily charts, it has breached its critical short-term supports and hence upsides as of now are looking limited to 27,470 kinds of levels.
It looks like it will not give clear-cut indications of strength unless the index closes above 27,552 levels. Post-Monday, if it trades below 26,895 then it should be seen as a sign of a short-term weakness.
Q) What is your call in rupee? Do you see the currency drifting lower in the coming week?
A) In the past rupee took strong support around 69 on multiple occasions between the years 2013 – 2016. For instance, in August 2013 it made a low of 68.80 and reversed its trend.
The same thing happened in February and November 2016 respectively from the same level. Hence 69 was some sort of strong support on the charts.
Whenever such a strong technical breakdown occurs on charts then the trend will continue to remain downward for a longer period of time.
Hence, going forward 70 can be the new normal and rupee may get settled above 70 for a prolonged period of time.
In the near-term critical support is placed around 70 and a close below that may signal short-term uptrend for rupee. Contrary to this, a close above 72.91 shall resume its downtrend.
Q) What is your call in small & midcap space as individual stocks have suffered in the last one month due to foreign selling and rupee depreciation?
A) As we are entering a period of uncertainty owing to ‘series of elections’ ahead of us in the next 6 months it looks prudent to stay away from mid and small cap space as they become the favorite whipping boys in volatile times.
However, we suggest accumulating fundamentally strong counters by making use of sharp corrections in near future owing to election-related volatility.
Meanwhile, they are more like exits on rallies rather than initiating a fresh buy at current level.
Q) Any top three stocks which investors can look at for a period of 1-month?
A) Here is a list of top three stocks which could give 4-10% return in 1 month:
Asian Paints: Buy| LTP: Rs 1331| Target: Rs 1390| Stop Loss: Rs 1295| Return: 4%
This counter registered a Hammer formation on the weekly charts after retracing 50 percent of its last leg of the rally from the lows of Rs 1,092 registered in March 2018 to Rs 1490 levels.
Hence, this decent correction of its larger upswing appears to be providing a decent entry point once again. Hence, positional traders should buy into this counter for a target of Rs 1390 with a stop below Rs 1295 on a closing basis
JSW Steel: Buy| LTP: Rs 407| Target: Rs 447| Stop Loss: Rs 387| Return: 10%
This counter appears to be in a steady uptrend as it is consistently hitting new lifetime highs week after week.
As this counter appears to be consolidating for the last couple of days in a range of Rs 388 – 414 positional traders should make use of this pause or minor corrective phase to go long in anticipation of this range breakout with a stop below Rs 387 on a closing basis.
An initial target can be kept at Rs 447 whereas based on long-term trend studies a bigger target of Rs 470 can’t be ruled out in near future.
United Spirits: Buy| LTP: Rs 581| Target: Rs 641| Stop Loss: Rs 560| Return: 10%
After retracing 80 percent of its last of the rally from the lows of Rs 548 – 661 this counter registered a Bullish Engulfing formation strengthening the case for either the end of correction at the recent low of Rs 565 or a pullback move.
In case pullback rally materialises then the initial target is placed around Rs 641 levels. Hence, positional traders are advised to buy into this counter with a stop of Rs 560.
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