Nifty Infra index to show relative outperformance

By Manav Chopra
Head Research - Equity, Indiabulls Ventures

Where we are: Nifty last week has recovered from its key support levels and has managed to sustain above the 11,700 levels and has formed a bullish engulfing pattern on the daily charts. The Nifty index historically has provided average +11.6 per cent returns from June lows to July highs in past 18 years. This hints at a bullish rally for the markets in July and price reversal formation last week too confirms a bottom in place.

What is in Store: The Nifty has closed above its key averages and faces immediate resistance at 11850 levels on the upside and on a decisive close above can lead to a bullish trend reversal. The weekly support of 11,650-11,600 levels if held hints at a possible rally towards the 12,400 which is the target of the upper channel resistance and thereafter 12,800 levels. The overall trend remains bullish as long as the short-term supports of 11,650-11,600 are held.

What could an investor do: We expect Nifty Infra index to show relative outperformance in the coming few weeks as most of the stocks have bounced from their oversold levels and provide a high margin of safety. Our top picks are LT, Tata Power & Concor and one can expect 10-15 per cent returns. Ultracemco and Muthoot Finance can see a short-term rally of 5-8 per cent.