Avoid aggressive bets as Nifty likely to face resistance near 16,900-17,200: Mehul Kothari

“For the coming weeks, 16900 – 17200 might be a strong hurdle since they are the 50% and 61.8% retracement level of the entire fall from 18100 to 15700,” says Mehul Kothari, AVP – Technical Research, Anand Rathi Shares & Stock Brokers.

In an interview with ETMarkets, Kothari said: “The immediate support is placed at 16300 and a breach of the same might bring in further nervousness in the markets. Traders are advised to avoid aggressive bets and trade on both sides.” Edited excerpts:



It was a strong week for markets where bulls pushed the benchmark indices higher by over 1% each. What led to the price action?
May 2022 belonged to the bears since they dominated the bulls during the first half. Initially, during the first couple of weeks, the index kept inching lower and breached the support of 16400 – 16200.

The selling pressure was such that the index sneaked below the 16000 mark and almost retested the swing low of 15670.

However, this was followed by a decent recovery in the markets during the second half of the month and the index closed above 16600.

Although the index rallied around 1000 points from the low eventually it lost around 3 per cent from the April month’s close.

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In the recent week, the index started with an upside gap but consolidated in the later trading session. Some softness in Friday’s session forced the index to close the week on a flat note.
It seems that the market is still adjusting to the global cues and the nervousness of the upcoming events like the RBI policy and the US Fed meet dented the sentiments.

Where do you see markets heading in the coming week? Do you see a similar momentum?
On the weekly charts, we are witnessing a ‘Double Bottom’ kind of formation near 15,700 mark. Thus 15700 would be a make-or-break level for the markets in the coming months.

A breach of 15,700 support could drag the index towards the 14,300 mark, gradually which is the 38.2% retracement of the entire rally which started from the 2020 year’s low of 7,500.

On the contrary, the death crossover of 50 and 200-Day moving averages are still intact and hence traders should not be complacent about the market conditions.

For the coming weeks, 16900 – 17200 might be a strong hurdle since they are the 50% and 61.8% retracement level of the entire fall from 18100 to 15700.

The immediate support is placed at 16300 and a breach of the same might bring in further nervousness in the markets. Traders are advised to avoid aggressive bets and trade on both side.

For the time we do not expect any one-sided rally in the markets due to the events like the RBI policy and the US Federal Reserve meeting.

In terms of sectors, Realty and IT stocks saw buying interest. What led to the price action? Do you see momentum continuing in the coming week as well?
After the sell-off in the last few weeks in these sectors the valuations have become attractive and as we saw global sentiments improving.

These sectors got some buying from the investors. For the coming week, there is a possibility that IT might continue to do well because the markets seem to be a bit volatile and defensive might further attract buying interest.

Do you think the market has made a bottom near 15700-15800 levels?
It is difficult to comment on this for the time being due to a couple of technical reasons.

1. If we look at the entire rally from the bottom of 7500 towards the life high of 18600 then the index has still not retraced even 38.2% (which could be a healthy correction). This retracement level comes around the 14300 mark and time will tell whether we are heading towards the same or not.

2. As mentioned above; the death crossover on the daily chart is intact and till the time 17400 is not taken out on a sustainable basis; markets might keep encountering sell-off at higher levels.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)



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