Bank Nifty’s underperformance likely to end

0
10
Bank Nifty’s underperformance likely to end


Technical analysts expect the Nifty to face resistance at 14,800 this holiday-truncated week after correcting 6 per cent from record highs of mid-February. They expect the index to find support at 14,250-14,350 levels. Analysts also expect the Bank Nifty to reverse its recent underperformance versus the Nifty in the near term. IT, Pharma, financials and FMCG are expected to outperform in the short term, they said. Indian markets were closed Monday on account of Holi. The index ended up 182.4 points, or 1.3 per cent, to close at 14,507.30 on Friday.

CHANDAN TAPARIA
DERIVATIVE ANALYST, MOTILAL OSWAL

Will the Nifty fall further?

The index is trading near its 50 DEMA (day-exponential moving average) while global indices have seen a good comeback from lower levels. The short-term trend is finding pressure but the major trend is positive which could provide some consolidation. The Nifty has to hold above 14,550 to witness a bounce towards 14,800 and 15,000. On the downside, support exists at 14,400 and 14,250. Cooling of VIX below 20 is required for a bullish grip and smoother move in the market. On the options front, maximum Put OI is at 14,000 followed by the 13,500 strike; while maximum Call OI is at 15,000 followed by the 16,000 strike. Option data suggest a broader trading range between 14,000/14,200 and 14,800/15,000 zones.

Will the Bank Nifty continue to underperform the Nifty?

The banking index has been making lower top – lower bottom and taking hurdle at the 50-DEMA in last five trading sessions. Till it doesn’t cross and hold above 34,500 zone, overall banking index is likely to remain under pressure along with its underperformance. On immediate basis, major support exists at 33,000 and 32,500.

What should investors do?

We suggest traders keep their positions light as the market is finding selling pressure at bounce with higher swings. Volatility is part of the market and investors should use any decline as a buying opportunity given the current market scenario. Investors can accumulate good quality stocks with outperformance in metals, selective pharma, financial and consumption sectors even after market volatility which can provide momentum with a margin of safety

GAUTAM SHAH
FOUNDER & CHIEF STRATEGIST, GOLDILOCKS PREMIUM RESEARCH

Will the Nifty fall further?

The index has tested an important support in the form of 14,350 late last week. This is the level where substantial action was seen around the Budget day. Demand has come in here but what remains to be seen is if the market is able to see a follow-up. A break of this number on a closing basis could lead to a move down to 13,700-13,800. Resistance is seen around the 14,760 level that looks like the best-case for the near term. The index will have to clear the same to confirm a bottom. Broadly, 14,350-14,760 is likely to be the near-term trading range. A breakout either side will lead to the next trending move.

Will the Bank Nifty continue to underperform the Nifty?

The Bank Nifty tested a very important support in the form of 32,600 last week. This was the breakout point in the month of Feb ’21. The set-up is oversold and hence a trading bounce could be seen with resistance levels at 34,000 and 34,400. With no concrete indications of a bottom as yet, one will have to ride this recovery with a cautious stance. Since the relative strength chart vs the Nifty is at a long-term support, Bank Nifty’s underperformance is likely to end. This is a good time to accumulate top banking names for the medium term.

What should investors do?

The index is likely to stay in a large range where rallies will face selling pressure and dips would be bought into. This is just consolidation before the next leg up. Defensive sectors IT, FMCG and Pharma look well placed at this juncture for longs. Mid-caps are likely to outperform the Nifty over the medium-term.

DHARMESH SHAH

HEAD-TECHNICALS, ICICI SECURITIES

Will the Nifty fall further? Since March 2020, the Nifty has maintained a rhythm of not correcting more than average 9 per cent and time correction has not exceeded for more than 3 consecutive weeks. We expect this rhythm to be maintained. In the current scenario, Nifty has already corrected 7.5 per cent from its all-time high of 15,432. Therefore, price-wise damage from hereon will be limited as we expect strong buying support to emerge in the 13,900-14,000 region. For the current week, 14,800 would act as immediate resistance for Nifty.

Will the Bank Nifty continue to underperform the Nifty?

Bank Nifty has seen a gradual retracement of 14 per cent post its strong post-Budget rally. Therefore the recent under performance should not be viewed negatively. We believe from medium-term trend perspective this is a healthy retracement as strong support exists in 32,000-32,500 region and risk reward in BFSI space has turned favourable at the current juncture. We expect price-wise damage could be limited now and the sector to resume its outperformance over the medium term.

What should investors do?

As we expect limited further price damage, any panic selloff from here should not be construed as negative, instead it should be capitalised on to construct portfolio from a medium-term perspective by accumulating quality large-caps and midcaps in a staggered manner. On the sectoral front, we expect IT, pharma, financials and FMCG to relatively outperform.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here