Chartist Talks | Why Nifty at 23,000 in Feb appears unlikely to Ashish Kyal

"It seems unlikely that Nifty 50 will touch 23,000 in February, given the consolidation and profit-booking at higher levels," Ashish Kyal, CMT, founder and chief executive of Waves Strategy Advisors, says in an interview to Moneycontrol.

He feels that if 21,550 is broken, then the index can show some selling pressure to 21,098 Gann levels. Only a close above 22,120 will extend the up move further from here on.

Among stocks, SMS Pharma is looking strong and attractive as index is continuing its formation of higher tops and higher bottoms, while the chart pattern is bullish for Bharat Dynamics, says the chartered market technician and Elliott Wave expert with nearly two decades of experience in capital markets.

Technically, what is the possibility of Nifty 50 hitting 23,000 mark in February?

The Nifty has been showing nervous signs after reaching near 22,000 mark. There has been multiple attempts to cross above 22,120 but prices failed to close above the same. We have also started seeing increase in the daily range of index. These are signs of loss of conviction by traders.

After the budget, the pressure was seen across Nifty and Bank Nifty. After a strong run-up that we have seen from the lows of 18,838 made in October 2023 there is a possibility of consolidation or short-term correction. Immediate support for the index is near 21,550 and an upside hurdle is at the 22,120 levels. We can expect rangebound movement within this zone and breakout of this range is required for a trend in that direction.

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It seems unlikely that the index will touch 23,000 in February, given the consolidation and profit-booking at higher levels. If 21,550 is broken, then the index can show selling pressure to 21,098 Gann levels. Only a close above 22,120 will extend the up move further from here on.

What is your strategy for Bank Nifty on Monday, considering the charts and futures and options data?

Bank Nifty on the weekly time frame is suggesting that the index is trading in a broader range from 46,500 – 44,500 levels. In the previous session (February 9), price closed on the positive note with a gain of 1.38 percent forming bullish candle. However, since past 5 trading sessions prices have not given any close above its previous day’s high so more price action is required to confirm if meaningful low is formed in this index.

Middle Bollinger bands can act as resistance which is placed at 45,972 levels. Derivative data is also confirming that 46,000 can act as strong resistance as 46,000 CE has highest open interest of 48.94 lakh and 45,000 levels can act as support as 45,000 PE has highest open interest of 34.11 lakhs.

In short, Bank Nifty looks sideways. Break below 45,500 can drag prices lower towards 45,000 follow up below can further extend this move towards 44,700. However, an hourly closing above 46,000 can result into deeper pull back towards 46,400.

Nifty PSU bank index was the star performer of the last week. Do you see the rally continuing in the index or is it looking overbought?

The PSU bank index has given a robust return in past few trading sessions. On the daily chart, price continued its formation of higher highs and higher lows keeping overall trend intact. We do not see any loss of momentum as of now. Overall, the structure suggests a bullish bias.

However, RSI (relative strength index) is trading near 81 levels which is indicating that some pause is needed before next leg on the upside. Higher reading on RSI is suggesting risk reward is not favourable at this juncture and it is best to use dips as buying opportunity.

The index is currently quoting near 6,944 levels with important support near 6,600. As long as the same is intact dips can be used as buying opportunity for a move to 7,200 levels.

Do you think the upward journey in Yes Bank seems to be unstoppable now despite intermittent consolidation and correction?

Yes Bank has shown strong rise from the lows of Rs 22.50 and now trading near Rs 31.40 levels. However, this stock has a tendency to give away all the gains equally fast and so one should trade with a strict stop-loss.

Overall, the outlook is positive as of now as long as Rs 27.50 remains intact on downside. On upside, Rs 36.50 can act as short term hurdle.

Your top two positional trades for February?

SMS Pharma

Pharma stock is looking strong and attractive as index is continuing its formation of higher tops and higher bottoms. On the of the stock from pharma space is looking attractive at current levels is SMS pharma.

In the previous session stock has formed a robust bullish candle and closed on a positive note. Along with this stock has given a break from a technical pattern which is known as rounding bottom pattern. Aling with this KST (know sure thing) is about to give a bullish crossover for which further buying is needed.

Huge volume spike with the breakout is also confirming the bullish bias. Nearest support is placed at Rs 133. In short SMS pharma, is bullish. A follow up action above Rs 152 can lift prices higher towards Rs 170 levels as far as price is holding Rs 133 on the downside.

Bharat Dynamics

The stock was trading in a range since December 26, 2024. Recently stock has given breakout of the trading range which is indicating strength. Increasing volume is also confirming the bullish bias.

Along with this MACD (moving average convergence divergence) has given a bullish crossover which is indicating bullish momentum can continue in next few trading sessions for further upside. Nearest support is placed at Rs 1,740 levels.

In short, chart pattern is bullish for Bharat Dynamics. A follow up action above Rs 1,880 can lift price higher towards Rs 1,980 levels as far as price holds Rs 1,740 on the downside.

Follow Ashish Kyal on Twitter - @kyalashish

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