Our view for BankNifty is bullish even from the present level. The way the index has been trading since the last few days, it indicates a further upside movement.
Bank Nifty may accelerate its upside movement by more than 1,500 points. The first level we may see on the index is 22,000, and then 22,500, Sumeet Bagadia, Executive Director at Choice Broking, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:
Q) The Nifty50 rose by about 6 percent in the week ended June 5. But, consistent selling pressure below 10,200 capped the upside. How would you sum up last week's action?A) The weekly closing above 10,000 level is a good sign for an upside movement. We have been observing a ladder-type of movement in the index for the many sessions now. This means the Nifty is spending its time between a range of 300-400 points.
For example, there was a time when the index spent its time between 8,800 to 9,200, after giving a breakout above 9,200 level, the index traded between the range of 9,200 to 9,600, and after giving the breakout above 9,600, the index started to trade between the range of 9,600 to 9,900.
This time, the range is 9,900 to 10,200 and it is likely that the index may give a breakout above 10,200 levels soon.
Q) What are the important levels to watch in the coming week? Do you think a breakout above 10,200 is possible?A) Yes, we are bullish on the index and it seems that the Nifty may give a breakout above 10,200 levels. If Index gives the breakout of the same then it will again accelerate its move up to 10,400-10,500 levels and beyond that 10,800 is also possible.
Q) Any important factors which investors should watch out in the coming week that are likely to chart market direction?A) There are a few factors which investors should keep in mind, like the ongoing situation of the economy affected by COVID-19. The lifting of partial lockdowns, and how this moratorium will impact the business of banks.
If uncertainty rises then definitely the volatility will also rise and that eventually will further hamper the portfolio of the investor in which we have already seen a dent in recent days.
Q) What is your call on the Bank Nifty? What we are seeing is a hot and cold moment for rate-sensitive stocks? What is causing all the volatility in the banking as well as NBFC space?A) Our view for Bank Nifty is bullish even at the present level. The way the index has been trading since the last few days indicates a further upside movement.
Even the large private banks and PSU Banks are trading with good support and have formed a bottom which indicates a good reversal in those counters.
So with the help of these banks, the Bank Nifty may accelerate its upside movement for more than 1,500 points. The first level we may see on the index is 22,000, and then 22,500.
Q) There was plenty of action in the small & midcap space – what is driving the optimism in the broader markets?A) As of now, small & midcap space looks good on a chart and recently these sectors have given a breakout as well which may lead to a further rally in the counters.
Moreover, recently many Small & Midcap stocks circuit filters have changed and it also added some fuel for an upside march.
Based on the technical parameters, we are seeing that these sectors give further upside movement for the upcoming 7 to 10 trading sessions.
Q) Which sectors are looking strong and which are looking weak based on technicals?A) At the present level, Cement, Metal, Pharma, FMCG and IT look good on all time frame charts, while for Nifty Financial sector is looking weak.
The Nifty Fin is still facing the resistance which is placed at 10700 levels. So, if the Index gives a breakout from the same, we may see good spurt up to the level of 12,300.
Q) Three trading ideas for the coming week with a time horizon of 3-4 weeks? Most pharma stocks are at their 52-week high. What is the outlook ahead? Should investors buy or book profits?A) At the present level, Pharma stocks are looking very good and among the Pharma stocks, Divis Lab, Dr Reddy, Cipla, Sun Pharma & Cadila are looking strong on charts.
Sun Pharma: Buy | Target Rs 545 | Stop Loss: Rs 455
On the daily chart, the stock has already given a breakout of its Flag Formation with above-average volume which is a good sign for the time being.
Moreover, the stock has been sustaining above its 480 level which suggests further upside movement from the present level.
Daily momentum indicator RSI reading is at 64.75 level with a positive crossover which points out for a positive breath in the counter, and any dip up to 480, would become a good buying opportunity with the stop loss of 455, and a target of Rs 545.
Divi’s Laboratories: Buy | Target Rs 2,745-2,800 | Stop Loss Rs 2,250
On the daily chart, the stock has given a breakout of its triangle formation with above-average volume which indicates a further spurt in the counter.
Moreover, the stock has taken the support of its 50-Days EMA which suggests a good bounce back in the counter. Any dip up to 2,380, would become a good buying opportunity with the stop loss of Rs 2,250 for a target of 2,745-2,800.Dr Reddy’s: Buy | Target Rs 4,400-4,450 | Stop Loss: Rs 3,750
Like Sun Pharma, the stock has given a breakout of its Flag Formation with above-average volume which suggests a further upside movement in the counter.
Moreover, the stock has been trading above its 50 Days Moving Average which shows a positive trend for the time being. So any dip up to 3,900, would become a good buying opportunity with the stop loss of 3,750, and a target of Rs 4,400-4,450.
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