Nifty upside may be restricted to 14,600-14,700

0
38
Nifty upside may be restricted to 14,600-14,700


The 50,000-mark on the Sensex is likely to remain elusive. Technical analysts see profit booking setting in the market after a rally of over 90 per cent in the Sensex and Nifty from March 2020 lows without any major correction. They see support for the Nifty at 14,400. The index closed at 14,433.70 on Friday. Frontline information technology stocks are also poised for a correction after the recent rally and investors should stick to FMCG, auto, insurance, and selectively in the pharma space, they said.

GAUTAM SHAH
FOUNDER & CHIEF STRATEGIST, GOLDILOCKS PREMIUM RESEARCH

Will Sensex hit 50,000 next week?
50,000 is just a psychological number. While hitting the same will be a feel-good factor, it does not impact the market set-up in any way. The index got within striking distance of the same last Friday and came off. The indices look overbought on the short-term charts and hence some “work” around the 50,000 level on the Sensex and 14,500 on the Nifty is likely. A patch of consolidation and even a short pullback would be healthy for the overall trend.

What should investors do at this juncture?
With the markets looking overly extended on the short-term charts, weakening breadth, global markets somewhat wobbly, rising VIX and the Budget nearby, it is advisable to turn cautious and conservative at these levels. Near-term upside looks restricted to the 14,600- 14,700 area. Immediate support seen at 14,400. A break of the same could lead to 14,040 and 13,750 levels. This expected passing correction would only be healthy for the underlying uptrend. Our medium-term view remains positive for 15,500. One can reduce leverage and stick to top-quality large-cap stocks. Mid-caps/Small-caps do not present a favourable risk-reward at these levels.

Some IT stocks fell despite strong results. What should be investors’ strategy in the IT sector?

A lot of the positives coming out of the earnings season is already in the price and we could be seeing a case of “buy on rumour/expectation, sell on news”. The technical target zone of 26,500-27,000 was achieved last week as well. The index is likely to see a much needed cool-off in the near term. Use the expected correction as a buying opportunity as the structural bull market remains intact. The best opportunities are currently in the FMCG, auto, insurance and select pharma stocks. Stay committed to them.

CHANDAN TAPARIA

DERIVATIVES ANALYST, MOTILAL OSWAL SECURITIES

Will Sensex hit 50000 next week?
Sensex has almost doubled in last 10 months from March panic low of 25,638 to recent swing high of 49,795. It has been making higher top – higher bottom on weekly scale but formed a small profit booking decline on Friday, which is healthy to start the next leg of rally if the support is respected. The index is at overbought scenario but major trend is positive and FII flow is supporting the bullish stance. Now, Sensex has to respect immediate support of 48,500 to hit the psychological 50K mark and rally towards 51,000 zone in the coming days.

What should investors do at this juncture?
Investors are suggested to use any decline as a buying opportunity and continue to be with quality names as major trend is intact to positive. Insurance, selective auto, chemical and telecom stocks are showing strength.

Some IT stocks fell despite strong results. What should be investors’ strategy in the IT sector?
IT stocks have fallen slightly post their earnings as they have already seen a good up-move in last couple of months. One should not worry much about this recent decline as a correction of 3-5 per cent in this index could again provide key support to lift the positive momentum. TCS, Happiest Minds and few other midcap IT stocks show strength to continue their positive momentum.





Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here