As FIIs take Christmas & New Year holidays, what should Nifty traders do? Kunal Shah shares his two cents

The last week of 2023 is anticipated to be sluggish as many foreign institutional investors (FIIs) are in holiday mode to celebrate Christmas and New Year, says Kunal Shah, senior technical & derivative analyst at LKP Securities.

“Despite this, the Indian market is likely to exhibit strength, and a sustained Nifty level above 21,300 could lead to further upside movements, targeting levels around 21,500/21,800,” he says.

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In this interview, he also lists out his top 3 picks for the last week of 2023. Edited excerpts:

How cautious have market participants turned after the unexpected crash on Wednesday? Given the holiday-shortened week and New Year mood, do you think we are in for a consolidation in the last week of 2023?
The upcoming week is anticipated to be sluggish as many foreign institutional investors (FIIs) are in holiday mode. Despite this, the Indian market is likely to exhibit strength, and a sustained Nifty level above 21,300 could lead to further upside movements, targeting levels around 21500/21800.

After the recent run-up, do you think Santa rally has already played out? Santa rally is usually associated with the upside seen in the final five trading sessions of December and the first two days of January.

The market’s underlying strength remains robust, and a breakthrough above 21,500 in Nifty could trigger a significant upward movement towards 21,800/22,000 levels. Breaking the resistance at 21,500 is crucial for sustaining the current uptrend momentum. On the downside, breaching 21200 might lead to sideways consolidation in the upcoming week.

What is the outlook ahead for IT stocks? Nifty IT has managed to outperform both Nifty as well as Nifty Bank.The outlook for the IT sector remains highly bullish in the near to short-term duration. The index has successfully broken out of a substantial consolidation phase, and recent developments in the US interest rate decision by the Fed have provided a boost to momentum. The IT index is anticipated to test the level of 37000 in the short term, and any dips should be utilized as a buying opportunity.

We are once again seeing sectoral churning with laggards like pharma and IT inching up and the high flying realty and auto stocks taking a break. What are your thoughts on how this sectoral rotation is playing out?
Sector rotation is a notable aspect of market cycles, and over the past month, we’ve witnessed significant shifts. The banking sector, along with pharma, has experienced substantial buying from lower levels, and our outlook is bullish for both sectors in the near term. Additionally, the chemical sector is showing signs of increased buying interest, indicating a potential positive move in the coming months.

Hindustan Copper gave impressive double-digit gains in the week. What is the outlook ahead?
The stock has demonstrated remarkable outperformance, registering a gain of over 30%. Technically, the stock has successfully achieved all its targets. For those who have been holding since lower levels, it is an opportune time to consider booking some profits. However, for new entries, a significant decline towards the 210 level, which corresponds to the previous swing high on the lower time frame, would be an ideal entry point.

Give us your top picks for the last week of 2023?

BUY OIL INDIA AT 360, SL-340, TGT 400/420

Oil India has demonstrated a robust breakout on the daily chart, accompanied by a significant surge in volumes. The momentum indicator, RSI, has confirmed the bullish sentiment by registering a positive crossover. The stock’s lower-end support is identified at 340, serving as a solid foundation for potential upward movements. With this positive momentum, the stock has the potential to reach upside targets at 400 and 420.

BUY SYNGENE AT 700, SL-675, TGT 750/765
Syngene has recently formed a double bottom pattern on the daily chart, complemented by a morning star pattern and backed by notable volumes, signalling a bullish trend. The momentum indicator RSI has undergone a positive crossover, providing confirmation of the buy signal on the daily chart. The lower-end support is identified at 675, while the potential upside targets are set at 750/770. Investors may find this setup favourable for considering long positions.

BUY SRF IN THE RANGE OF 2450-2425, SL-2350, TGT-2600/2650
SRF stock is poised for a breakout from a significant consolidation phase, supported by notable volumes. The momentum indicator RSI has displayed a positive crossover, affirming the buy signal. The lower-end support for the stock is observed at 2350, providing a cushion for potential downside risks. The upside targets for the stock are set at 2600/2650.

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