Nifty Outlook: Expert predicts consolidation, suggests profit booking & sectoral rotation

“In the coming period, there can be some kind of consolidation that can be seen near the zone of 23,080 spot levels towards 23,160. So, these two are the technical zones where one should try to book their profits,” says Osho Krishan, Senior Research Analyst, Angel One. Edited excerpts:

Osho Krishan: See, overall, if we are seeing the technical development in Nifty, then Nifty is moving in a rising channel pattern and currently it is hovering just near the higher band of the channel. So, I am expecting that in the coming period, there can be some kind of consolidation that can be seen near the zone of 23,080 spot levels towards 23,160. So, these two are the technical zones where one should try to book their profits because there can be some kind of profit booking as you have mentioned because we have seen a very strong rally from the zone of 21,800, so there can be some kind of profit booking that can be seen in the coming period when looking at the overall elevated volatility.

So, we are still not out of the woods regarding volatility. The Index is still on the higher end. So, there can be some kind of strong movement that can be seen in the near period but the undertone remains bullish. One should utilize dips to accumulate long positions and one should even try to book their profits once they are getting a decent profit for a short-term perspective. But the overall trend is very positive. If I have to discuss the positional moves, then 22,800 has seen a very decent writing from the put writers and 23,200 has seen a decent writing from the call writers. So, this is the immediate range that one can expect the market to hover in between and 22,800 should be acting as a support and one should try to book their profits around 23,200 in the coming week.

ET Now: How to approach markets in terms of your recommendation? Now, what would you recommend buying? The top sectors like PSU, and metals which have been performing, will they continue to perform, or will there be more legs to this pre-election rally because next week is going to be the last week before we have the election outcome.

Osho Krishan: See, basically we are going to witness some kind of sectoral rotation in the market because this week we have seen a lot of PSU companies perform very well. The PSU banks, the private sector banks, have performed very well. So, Bank Nifty has given a very drastic move which has given a very positive thumbs up to the benchmark index.

But overall, there can be sectoral rotation that can be seen. I am expecting that IT should now start gaining some pace from here onwards because many of the IT companies, the largecap and the midcap, all the IT companies are hovering at a very strong support zone. So, looking at the overall global markets, I am expecting that from here onwards, IT can gain some kind of traction in the near period. My first technical pick for the next coming trading sessions or next week is KPIT. KPIT today has seen a very strong up move and it has given a consolidation breakout which on technical parameters can also be seen as an ascending triangle pattern breakout.

So, I am expecting that the move should continue in KPIT Technologies. The target for this counter is approximately 1620 in the short-term period while it is advisable to keep a strict stop loss around the zone of 1490 because this was the level from where it started gaining traction in the recent period.

The second counter is from the financial space, Bajaj Finserv. If I have to say, it has seen a decent correction in the recent period but in the last two trading sessions, it has seen a very smart recovery from the lower levels and is currently hovering near the 200-day SMA. So, I am expecting that Bajaj Finserv can gain decent traction in the coming period. One should try to gauge the momentum in Bajaj Finserv, which has currently closed around 1600 odd levels, so one should try to buy around the same levels. The higher target that I am expecting is around 1650 to 1660 for a very short-term perspective and on the downside 1575 is advisable to keep as a stop loss.