Analysts, however, do not expect a rally to sustain for long as traders will be tempted to cut aggressive bullish bets.
A decisive move by Nifty below 17,750 is likely to prompt traders to add fresh bearish bets, said technical analysts.
, Apollo Tyre, , ICICI General Insurance and, , M&M, , ABB are some of the stocks suggested by analysts for short-term trading.
NAGARAJ SHETTI
TECHNICAL RESEARCH ANALYST, HDFC SECURITIES
Where is Nifty headed?
A long negative candle on daily chart indicates a downside continuation pattern. Nifty has reached the immediate support of previous swing lows of around 17,780 levels and closed near the lows. Post downside breakout of important support like ascending trend line on the weekly chart at 18,200 in the later part of December, Nifty seems to have finished its pullback rally. The index is at the support of around 17,780 levels, last three-week lows, and a 20-week exponential moving average. Weakness below 17,750 will likely drag the Nifty to 17,450 and 17,000 levels. Any pullback rally from here could encounter resistance around 18,100-18,250 levels.
What should an investor do?
The underlying trend of Nifty is weak, and any pullback rally from here could be a sell-onrise opportunity. Investors may use pullback rallies to book profit in trading long positions or lighten longs in their portfolios. A decisive move below 17,750 will likely allow going short in the market. Stocks with negative bias include , , , , , MCX, , , and PVR.
PRITESH MEHTA
SENIOR VICE PRESIDENT – RESEARCH, YES SECURITIES
Where is Nifty headed?
Failure to surpass the peak of 18,265, marked around a three-digit Gann number of 183(00), resulted in a sharp decline. Decay picked up later in the week, led by a fall in Bank Nifty and the Financial Services index. Without leadership, the index has been struggling for direction, trading in 18,300-17,800 band. With the confluence of support around 17,800, rangebound trade is expected to continue. Fresh rally would come into play once Nifty confirms a shift in
as par Gann parlance above 183(00).
What should investors do?
A red tall bar in both Bank Nifty and Finance Nifty is likely to keep the recovery short-lived. Instead, the focus should be on the space which has been showing outperformance. Our customised insurance index is carving out bullish patterns. Within the space, ICICI General Insurance and SBI Life are expected to continue their momentum with a potential upside of 8-10% in the next few weeks. The Nifty PSE index has made a sharp comeback, trading above the 10-column average and attempting to surpass the 45-degree sloping trendline. Within the space, IndianOil and GAIL are likely to outperform.
CHANDAN
ANALYST-DERIVATIVES,
Where is Nifty headed?
Nifty has formed a bearish candle on daily scale and a bearish candle and an inside bar on a weekly frame. We expect the index to remain in broader trading range of 17,777 to 18,250 zones where a decisive range breakout would trigger a fresh rally leg. If it fails to surpass 18,018 zones, it may again drift down to 17,777 zones; while a hold of 18,018 could take it back towards a key hurdle of 18,250 zones. Volatility needs to now cool down below 14 (VIX) zones for stability to return. On the Options front, the weekly maximum call OI is at 18,000, then 18,100 strike, while the weekly maximum Put OI is at 18,000, then 17,600 strike. Options data suggests a shift in the trading range between 17,600 to 18,350 zones, while an immediate trading range is between 17,700 and 18,200 zones.
What should investors do?
Sectorwise, positive setup was seen in tyre, oil marketing companies, insurance, and selective FMCG stocks, while weakness and volatility could be seen in BFSI and cement stocks. Positive setup is seen in Balkrishna Industries, Apollo Tyre, HDFC Life, M&M, Cummins India, ABB, ITC, IOC, and
.