Investors who are serious about making money from stocks should ignore SMS tips. It is better to invest in a blue-chip stock even, if the price is high, rather than buying low-priced junk.
Investors who are serious about making money from stocks should ignore SMS tips. It is better to invest in a blue-chip stock even if the price is high, rather than buying low-priced junk, Rajesh Palviya, Head – Technical & Derivatives Research Analyst, Axis Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) The market remained volatile throughout the week with 10,800-10,900 levels acting as a major resistance. What led to the price action on D-Street?
A) Good corporate earnings from key index components and firm global cues helped the investor sentiment even as coronavirus cases rose globally.
While IT stocks posted sharp up move post-TCS and Infosys numbers. The market has gained for the fifth consecutive week and the Sensex managed to close above 37,000 and Nifty above 10900 levels.
Hopes of an early launch of the COVID-19 vaccine kept global market sentiments positive. The markets globally are banking on continued liquidity to ensure that the recent momentum seen in the markets does not stall.
Q) What are the major levels that one can watch out for in the coming week?A) The Nifty50 started the week on a flat note and remained consolidated for the most part of the week. However, the last couple of trading session's gains pulled the index higher to end on a positive note. The Nifty closed at 10,902 with a gain of 134 points on a weekly basis.
On the weekly chart, the index has formed a long bullish candle forming a higher high-low compared to the previous week and has closed above previous weeks, indicating a positive bias.
Also, the index has closed above the 200-day MA for the first time after the COVID-19 fall, indicating a positive bias.
The index continues to move in a Higher Top and Higher Bottom formation on the daily chart indicating a positive bias. The chart pattern suggests that if Nifty crosses and sustains above 11000 levels, it would witness buying which would lead the index towards 11200-11400 levels.
However, if the index breaks below 10,800 levels, it would witness selling which would take the index towards 10,700-10,500.
The Nifty50 is trading above 20 and 50-Day SMA which is an important short term moving average, indicating a positive bias in the short term.
The Nifty is expected to remain in an uptrend to sideways zone until it breaks 10,200 on the downside. For the week, we expect Nifty to trade in the range of 11,200-10,600 with a positive bias.
The weekly strength indicator RSI and momentum oscillator Stochastic have both turned positive and are above their respective reference lines indicating a positive bias.
Q) What do you make of the recent earnings from the IT space? The majority of the stocks hit a fresh 52-week high in the week gone by. What should investors do if they want to invest in the IT space?A) Infosys reported Q1 earning numbers which were way ahead of street estimates. The IT major also gave full-year constant currency revenue growth guidance amidst the COVID-19 pandemic.
The NSE IT index is trading near to all-time high level and in the recent past, IT stocks have shown consistent buying interest. Nifty IT has witnessed ‘V’ shape recovery.
The Nifty IT chart pattern suggests if it manages to give breakout above 17000 levels then it would exhibit further upward momentum towards 17,600-18,000 level in the short term, while on downside 16,400-16,200 is likely to act as support in the short term.
We advise one should use any corrective action as a buying opportunity to buy stocks in the IT space.
Q) Twitter fiasco about Bitcoin is something that came out of the blue. Such scams happen when retail investors, especially the new ones, get charmed by SMS or email tips? Are there any red flags that you want to highlight for traders?A) Many beginners and uninformed investors fall victim to scams by taking action based on these tips. Usually, these tips advise receivers to take action which might not be suitable for their portfolios, thus causing them multiple losses while trading.
This entire process of wrongly inflating the price of a stock is known as a “pump and dump” scam. It is commonly carried out through unwanted stock tips.
Generally, this kind of activity happens in low price stocks, and one should always avoid low price stocks. It is easy to fool people into thinking that they are buying undiscovered gems at rock bottom prices.
Investors who are serious about making money from stocks should ignore SMS tips. It is better to invest in a blue-chip stock even, if the price is high, rather than buying low-priced junk.
Q) Top 3-5 trading ideas which traders can initiate in the coming week with a time horizon of 3-4 weeks?A) Here is a list of top three stocks for the next 3-4 weeks:
Apollo Hospitals Enterprise Ltd: Buy Range 1500-1470| Stop Loss: Rs 1435| Target: Rs 1585-1615The stock has broken out from a “Rounding Bottom” formation, indicating increased participation by the bulls. The weekly strength indicator RSI continues to maintain its bullish momentum indicating a sustained uptrend.
Stochastic has given a bullish crossover on the weekly timeframe indicating bulls are in control. The stock is trading above all the major moving averages (20, 50 & 100 SMA) indicating a sustained uptrend.REC Limited: Buy Range: 105-103| Stop Lloss: Rs 99| Target: Rs 114-118| Upside
The stock has confirmed the “Hammer” pattern after a steep fall indicating increased participation by the bulls. The stock has also bounced from the 50 percent retracement level indicating buying support at lower levels.
Volumes are above average further confirming our bullish thesis. The weekly strength indicator RSI is nearing to give a bullish crossover and Stochastic has given a bullish crossover on a weekly timeframe indicating bulls are in control.
Westlife Development Ltd: Buy Range: 343-337| Stop Loss: Rs 325| Target: Rs 370 – 380| UpsideThe stock has broken out from a “Rounding Bottom formation” indicating increased participation by the bulls. The daily strength indicator RSI continues to maintain its bullish momentum indicating a sustained uptrend.
Stochastic has given a bullish crossover on a weekly timeframe indicating bulls are in control.
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