For most part of the week we were hovering in the green territory. It was only over the last couple of trading sessions which sour the mood. Nifty is below 17200 mark. Does the trend continue to be on the upside and the risk-reward favours the long position now?
I believe that the risk-reward still stands in favour of many long positions. Typically we say that never short a dull market we have just gone through five days of consolidation on the Nifty where the Nifty remain in a 2% band.
Now this comes in the context in the last so many weeks and over the last one and a half odd month where the opening tick on the indices was just about 1% to 2% and now we are into a zone where the net trading band for the index is just about 2% on an average. So that is why I think it becomes very difficult to try and anticipate that which side the markets would turn but when I look at the charts, when I look at the indicators the market breadth, the kind of sector moves which we have seen in the last one week so even though it has been a more tepid week for the indices but when you look at the sector churns there have been good come backs in terms of sectors.
Nifty IT index managing to buck the trend, you have the pharma index which saw some good recovery. The metal stocks have done reasonably well for themselves so when you look at these kind of strong sector moves as well as the global charts it just gives an indication that the markets would probably break out once again on the upside post this consolidation so would wait out for 17350 to be taken out to create an index trade but the bias remains bullish whether it is stock specific or whether it is the overall index front.
What is your take regarding Nifty Bank because that one has underperformed three out of four weeks. Your call was to sell the Nifty Bank at these levels. What are the important markers that you are tracking on that?
Over the last couple of days, I was sensing some weakness which was coming back into the banking index because of the weakness which was there in the private sector bank names now whether it is likes of Kotak Bank which has come back towards its two week, three week lows for itself or whether it is a likes of ICICI Bank which has been unable to break past above its 200-day moving average.
In fact even the Bank Nifty has been unable to break past convincingly above its 200-DMA so which means that you know the set up for the banking index was not very encouraging. Now when you are into a zone where the indices consolidate you have to look out for those weaker points or the weaker sectors and Bank Nifty was emerging to be one of the weaker sectors over there so which is why I had given a call to try and look at the sell on Bank Nifty with a target range around the 35000 mark.
We more or less tested that 35000 mark on the Bank Nifty on Friday as well so that means it just gives an indication that we have now come back to the lower end of the trade or the range for the Bank Nifty. So in terms of levels 35000 could be a good support for the Bank Nifty and the more closer we are to the support the higher is the risk reward and the better is the risk reward to go for contrarian trades. Now whenever we are trading into a range it is more prudent to look at more contrarian trades when the indices are trading near the support or the resistances so in this case 35000 is a support for the Bank Nifty and I believe possibly next week we could see the Bank Nifty heading towards at least 36000-36500 on the index.
We have seen wild moves when it comes to that particular commodity as well any kind of semblance or any kind of credible levels that are being suggested by the charts for crude going forward?
The last two days or three days there have been some very heightened volatile moves for crude so from a level of 110-112 we manage to jump up to 120-124 on the Brent crude and from 124 I think by the weekend we were almost at 117-118 levels for crude so these are very wild gyrations when you look at this kind of an asset class.
But it is just that when I look at the charts for crude and I am talking it from a very short term view like over the last couple of days is that 120-124 band has been a huge resistance for crude and it has been unable to break past above those kind of levels.
In fact over the last two days the crude has manage to and show lot of topping formations at that 120-124 so assuming if there is no major geopolitical news flow which turns around for the asset class over the weekend I believe that there is a high possibility that crude can get into a gradual cool off mode or a correction mode so I think 120-124 remains to be a huge resistance band for the Brent crude levels. I believe if we do not surpass those levels yet again there is a high chance that we may come back towards 110 or maybe even a 105 levels for Brent crude over the next one or two weeks.
What are your top bets for the coming week? You were very bullish as far as the banking space is concerned. Would you venture some interesting names for us from the financial sector?
The focus is on financials I am expecting recovery across many individual names two buy calls the first one which I am suggesting is SBI Cards now we do not talk of the stock that often but the short term charts for SBI Cards is indicating that the stock is at the cusp of a decent breakout for itself so it is both daily as well as the weekly crossovers which have happened for SBI cards and I believe that there is a strong early indication that the stock may get back into a strong momentum zone for itself so would suggest a buy at 900 as an immediate target so short term traders can look at a 40 to 45 points upside from current levels stop loss could be kept at 835 to 840 zone.
The second would be a buy on Bank of Baroda a very interesting chart because at a point when the Bank Nifty still struggling below its 200-day moving average Bank of Baroda is perched at a breakout point above its 50-day moving average and it is already comfortably above its 200-DMA. There is a stronger degree of outperformance is already seen into the stock price, inverted head and shoulder pattern as well spotted on the daily charts so would suggest a buy on Bank of Baroda expecting breakout targets of 116 stop loss 104.