Tuesday, March 21, 2023

Watch the US Fed event! Can give strength to around 17,400 bulls: Mehul Kothari

The bulls may get some confidence as Nifty 50 closes above 17,400. On the other hand, intermediate support will be at 16,800 downside, says Mehul Kothari AVP – Technical Research, Anand Rathi Shares & Stock Brokers.

In an interview with ETMarkets.com, Kothari said that as of now the short term trend is under pressure due to death crossover, but on a broader basis, we see a slide towards 16,400 in Nifty as a buying opportunity for a few months. Huh. Edited excerpt:

A volatile week for the markets but the bears remained in control for the week ending April 29. What was the reason for the price action?
It was a disappointing week for the bulls on D-Street as all attempts by the markets to recover went in vain. Till the first half of Friday’s session, the benchmark index was performing well and reclaimed the nearly 17,400 mark.

However, a sharp sell-off during the end of the session forced the index to close near the 17,100 mark, down nearly 300 points from the day’s high.

The selling pressure seems to be entirely global as the US indices are unable to hold steady. At the same time, the dollar index has weakened the overall sentiment ahead of the meeting of the US Federal Reserve.

On a monthly basis in April, the benchmark indices ended flat with a negative bias. How is the market likely to move in the May series? What are the important levels one should track in Nifty and Nifty Bank?
During the month of April, the benchmark index lost over 2 per cent near March 2022, but the bigger worry is that the index broke over 1,000 points from its top of 18,115. This indicates the dominance of the bear.

Now, on the daily chart of Nifty 50, we are seeing a ‘death crossover’ of the 50-day moving average and the 200-day moving average.

Thus, unless it is negated, every move in the market is likely to remain under pressure. On the level front, 17,400 is a strong breakout point for the coming week.

A level above 17,400 may give some confidence to the bulls. On the other hand, 16,800 will act as intermediate support on the downside. A breach of this could drag the index towards the 16,600–16,500 mark which is a 61.8% retracement of the entire rally from 15,700–18,100.

With respect to the Nifty Bank index, it has broken over 2,500 points from its monthly high of 38,765. We are seeing a major channel breakout failure in Nifty Bank Index.

Apart from this Nifty Bank Index also has ‘Death Crossover’ on daily level. Thus 37,000 will be a strong hurdle for the index for the coming week.

Only a permanent move above this may bring some hope for banking stocks. Conversely, a breach of 35,500 could drag the index towards 34,500-34,000 levels in the coming week.

Will the May sell out come true in 2022? FIIs have sold over Rs 37,000 crore in the cash market of Indian equity markets in April.
It totally depends on the mega event of US Fed. The short-term trend seems to be under pressure due to the death crossover mentioned so far, but in the broader term, we see a slide towards 16,400 in Nifty as a buying opportunity for a few months.

The BSE Small and Midcap index rose over 3.5% in April, compared to the flat performance of Sensex and Nifty. What was the reason for the price action, and how should investors see this position play out in May?
Both midcap and smallcap indices were also not spared. Earlier we saw a beating in the heavyweights, whereas during this week, we saw a correction in the broader markets.

Eventually both the indices ended the months with marginal gains. With respect to BSE Smallcap Index, we expect a downside correction towards the 28,000 mark which is the location of its 200 DSMA.

Meanwhile, 24,000-23,500 strong support zone could be seen for BSE Midcap index from where buying could take place.

Your 3-5 trading ideas for the May series for the next 3-4 weeks?
Here is a list of the top business ideas for the May series.

Hindalco: Buy above 490. LTP: Rs 483. Stop Loss: Rs 470| Target: Rs 530. up about 10%

On the daily chart, we are seeing that the stock found support at its 200 DEMA position. This support coincides with the placement of a bullish harmonic Alt Shark pattern.

The potential reversal zone of the pattern lies between 485 – 475. We are expecting a strong trading bounce in the stock from the current levels.

Thus we advise traders to go only in stock above 490 with stop loss of 470 for the target above 530 in next 3-5 weeks.

Endurance Technologies: Buy| LTP: Rs 1213. Buy on Dips | Stop Loss: Rs 1,100| Target: Rs 1,370. up 12%

Over the past few sessions, we are seeing positive price action in endurance with heavy volume which indicates accumulation.

On the daily scale, we are seeing a range breakout which suggests a possibility of an upward move from here.

Moreover, even the daily RSI has confirmed a breakout above the 50 level, which adds more confidence to the bullish outlook.

Thus, traders can deposit the stock in the range 1220 – 1180 with a stop loss of 1100 for the target above 1370 in the coming 3-5 weeks.

Tata Power: Buy| LTP: Rs 242. Buy on Dips. Stop Loss: Rs 220| Target: Rs 280| Up: 16%

During its strong uptrend,

Consolidated in the band of 260 – 200 for several months. Recently, it broke out of that range and tested around 300 points. However, it is again in the breakout zone.

Range breakout target comes around 320 but we are also seeing a flag breakout on larger time frame.

Thus we advise traders to go long in the stock in the range 242 – 238 with a stop loss of 220 for the target above 280 for the next 3-5 weeks.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of Nation World News)


Nation World News Desk
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