Nifty has broken yet another all-time high and has closed almost 3 percent above from last week.
The valuations and every indicator on the charts suggests that the current run-up has to take a breather. It is difficult to say when that correction will come. We feel that it is long due and the markets will offer a decent correction before resuming its upward trajectory.
Nifty & Bank Nifty Outlook
Although both Nifty and Bank Nifty have closed with great strength, we feel that the coming weeks will be volatile and markets may correct.
There are good support zones for each of these indices, with 36,500 standing strong for Bank Nifty and 17,300 for the Nifty 50.
This sector has corrected slightly but we feel that this should reverse in the coming weeks, as uncertainty rises globally and with broader indices being stretched, this is going to be the safe haven for investors moving forward
Just like the FMCG sector, the IT sector too has experienced windfall returns over the past 6-10 weeks and has broken a fresh all time high, this is one evergreen sector in our opinion providing great returns and more importantly stability to the portfolio. It looks like it will correct a bit over the coming weeks before it resumes its upward trajectory.
NIFTY Pharma & Nifty Auto
Just like last week, we maintain a mildly bearish stance on both these indices as the charts look weak.
Nifty current month future closed with a discount of 4 points to its spot. Next month's future is trading at a premium of 26 points.
We saw open interest addition of nearly 0.23% in Nifty and considering the price action it clearly hints strong buying during the week.
The following stocks saw OI build up with a corresponding increase in price, suggesting a bullish sentiment.
The following stocks saw OI build up with a corresponding decrease in price, suggesting a bearish sentiment.
Top 5 recommendations for the next week
BAJAJ-AUTO is has been consolidating in a range for the past 4 weeks. It has previously broken a similar consolidation and moved quite a bit. There could be a good opportunity to go long in this counter above 3900
KOTAKBANK is trading near its all time high. It has taken the support from the previous resistance zone. Any sustainable move above 2055 level will offer a good opportunity to go long.
PEL is trading near its previous resistance zone. On the weekly timeframe its forming higher highs & higher lows pattern which signals a good buying opportunity.
SAIL is forming lower high & lower low pattern formation on the daily timeframe which confirms downtrend in the stock. Also its taking resistance from the previous support level. Good shorting opportunity below 104 level.
JSWSTEEL had taken the resistance from the 20 day moving average. Good shorting opportunity below 650 level as it failed to cross the 20 day moving average.
(Gaurav Udani is Founder & CEO of Thincredblu Securities. He tweets @Udanii)