Chartist Talks | Ashish Kyal sees next target for Nifty at 22,877, Rs 1,465 crucial for 7-10% rally in HDFC Bank

With the benchmark Nifty index in a positive momentum, sustaining the buy-on-dips mode towards 22,877, any price action near this zone will determine if the market bellwether is headed towards 23,500 or not, according to Ashish Kyal, CMT, founder and CEO of Waves Strategy Advisors.

In case of HDFC Bank, which has been consolidating since the middle of January, he feels any move above the high of Rs 1,465 will be a strong indication of a positive breakout on upside which can open the targets for Rs 1,543 followed by Rs 1,585 levels.

Kyal shares his views on the technical aspects of the current market dynamics in an interview for Chartist Talks. Excerpts from the interaction with Moneycontrol:

Are the charts making you confident that the Nifty 50 is moving towards 23,500 in the coming weeks before getting into a long consolidation phase?

The Nifty undertone remains bullish and we have been maintaining this stance since past many weeks. On an upside, the target can be near 22,877, which is derived as per Gann square of 9. It will be important to see if the rise from here gains momentum.

Over the past few days, we can see a slowdown in the broader market as the overall breadth has deteriorated. There have been more declining stocks than advancing ones which is a little concerning. However, if we look at the overall index, prices touched their lifetime highs keeping the tone positive.

To put it in simple terms, the Nifty continues to be in the buy-on-dips mode for the target of 22,877 level and any price action near this zone will be important to confirm we are at all headed to 23,500 or not. Bank Nifty is yet to reach its lifetime highs of 48,640 and one should also keep a watch on this index if it starts gaining momentum or not from here on.

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Do you think the HDFC Bank is close to ending the consolidation phase and moving up by 7-10 percent in the coming weeks?

HDFC Bank showed a sharp decline in January. After forming a low near Rs 1,380 on January 24, the prices are forming a triangle pattern. Any move above the high of Rs 1,465 will be a strong indication of a positive breakout on the upside which can open the targets for Rs 1,543, followed by Rs 1,585 levels, which is a 61.8 percent retracement of the entire fall.

On the downside, Rs 1,400 remains an important support for the stock. In a nutshell, a break above Rs 1,465 will open the possibility for a 7-10 percent rally in this stock when every trader is expecting it. Also, as per time cycle method, April 12, 2024 is an important positive reversal date after which momentum in HDFC Bank should pick up.

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Does the rally in the Nifty Auto index look unstoppable, despite intermittent minor consolidations?

Nifty Auto has continued to be strongest sector among the sub-indices. Short term indicators are overbought but it is best to avoid catching a top and use any dips as opportunity to enter into the auto stocks.

In a nutshell, momentum is strong and best to use dips to enter into the medium to long term uptrend in this sector. This index is currently trading near 21,126 which has minor channel resistance and so dips to 20,450 level will be a good entry for a move to 21,800 on the upside.

Considering the current momentum, will the Bank Nifty hit 50,000 mark first before entering into a consolidation and correction mode?

Bank Nifty formed an important low at 44,633 on February 12. This was the time cycle area from where the index swung on the upside. Time cycles help understand if the time is in sync for prices to rise.

As per this study, Bank Nifty is in a positive zone and we are optimistic that the index can touch the levels of 50,000 over the coming weeks. On the downside, the support is near 46,200. Only a breach below this will be a sign of caution but as long as the support is intact, the trend seems to be positive for the near term.

Your top two stock ideas for the next week...

Zensar Technologies has shown a strong bullish candle pattern along with good volumes, giving a positive breakout. The stock has important price-action support area near Rs 560 and prices can move to previous pivot high of Rs 645 level.

Avanti Feeds is showing impulsive rise with prices completing wave 2 and current rise in form of wave 3 higher. Volumes are also picking up with rise which is a positive sign. Support on downside is at Rs 538 and we can expect a trend to Rs 600 on upside.

Follow Ashish Kyal on Twitter - @kyalashish

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