Bullish setup for Nifty, Bank Nifty; pharma, oil & gas to remain in focus: Rajesh Palviya
ET Now: We did see some bit of a recovery coming in in the second half of the trading session, especially on the Nifty Bank we did see a good recovery. So, come Monday morning there are a lot of cues to watch out for. Earnings will start next week. What are the levels to watch out for in the next trading session?
Rajesh Palviya:
So, if we analyse in a broader sense, both indices are trading above the 20-day moving average, which is a sign of positivity on the near-term perspective. Even if we look at the India VIX which is trading at the lower band of this, it is trading at the lower band of the last five-six years. It is quoting at around 12.40 kind of level, so which is also giving a sign of that sentiments are intact on the bullish side for the market. There is no fear on the street. If we analyse the broader market, most of the midcaps and smallcaps are still holding. Despite some volatility in the indices, the midcap and smallcap stocks are still holding above their near-term, short-term breakout levels. We have seen participation from sectors like oil and gas, metal, even it, even pharma, all these sectors were showing strength in this volatility also. So, buying interest is clearly there in the street and the traders as well as investors are trying to buy stocks where risk-to-reward is in their favour, and the large accumulation activity is already done for the sectors on the buying side of the trade. For indices, we believe that till the
Nifty
is holding above 25,300, the trend is likely to exhibit on the bullish side. On the higher side, 25,600 to 25,500, this range may act as a supply zone, as major call writing activity has been there, especially in the last two to three trading sessions for this strike. So, once Nifty manages to cross above 25,600, then we may witness some short covering action and then the possible rally can extend further to 25,800 also. So, our view is bullish. 25,300 is the stop loss to buy and accumulate in Nifty. For Bank Nifty, 56,500 is the key support area based on the put-based concentration. Till these levels are intact, here also
Bank Nifty
will try to exhibit on the bullish side only. 57,200 is the immediate supply zone based on the call concentration. Once Bank Nifty manages to cross these levels, we may also see short covering action, which could take Bank Nifty higher, further to the 57,600 to 57,800 zone.
ET Now: You have given the levels of Nifty and Bank Nifty, but I ask you about the sector specific, which are the pockets one should pencil in at least for next 10 days where we understand the news flow will be too heavy?
Rajesh Palviya:
Some of the sectors where we are witnessing fresh breakout and fresh buying activity are oil and gas, telecom, pharma, and capital goods. These sectors are attracting more buying action, especially this week. We have also witnessed a lot of stocks from these sectors showing good buying action. So, from oil and gas, there is a fresh breakout from the OMC pack, like BPCL, HPCL managed to give a fresh breakout, and from the midcap space, Chennai Petro managed to give a breakout, even Reliance is also looking bullish. So, all these stocks are showing fresh buying action. Again, gas-related stocks, like MGL, IGL, are also on an upward trend. So, all these stocks are looking bullish, and we believe the kind of breakout that happens can take these stocks further higher. Another sector where we are focusing is pharma. Some of the stocks from the pharma sectors are still trading at all-time high trajectories and the way the buying interest is there in stocks like Laurus Labs, Glenmark Pharma, even Divi's Lab, all these stocks are attracting buying, even despite these all stocks are at all-time high trajectory and some of the stocks which were under corrective mode are also started recovering from the lower band of their consolidation. So, pharma is another space where one can focus in the coming week for the buying side. And from the capital goods space,
Siemens
and ABB, these two stocks are looking promising, so here also one can look to buy, and we may see good up move in these stocks also.
ET Now: Which are the stocks one should focus on specifically and are there any recommendation from your side?
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Rajesh Palviya:
From the sectors discussed, I've picked two stock ideas. The first is from the pharma space — Glenmark. lenmark has given a fresh breakout from a rounding bottom formation on the weekly chart, indicating the potential for continued upside. So, we believe that here, there would be more continuity of uptrend, possible upside towards 1,890, 1,900 we may see for Glenmark. Buy and accumulate would be strategy and 1,805 should be the stop loss. Another stock that we like is Reliance Industries. Now, stock is negotiating with its September 2024 swing high and the way the stock is showing strength on the weekly chart, we believe that Reliance may continue furthermore upside and we may see good support in the indices also from the
Reliance Industries
itself, possible target towards 1,570 we are expecting in the near-term perspective, so buy and accumulate would be the strategy with stop loss of 1,500.
ET Now: The stock for the day, perhaps the week, was Trent, that was down and out 11%. But Trent has been in a corrective phase whether it is on the back of weak updates coming in or weak outlook or a downgrade coming in from brokerages because Trent had also run up quite a bit. From here on, what do you see on the charts for Trent?
Rajesh Palviya:
So, we have observed that Trent, the major support area on the downside, is placed at around 5,000, 4800 for it. We have seen the same kind of corrective move earlier also for the stock. Now looking at the intensity of supply pressure in today's session, we may see furthermore down move towards 5,200, 5,100 kind of level. But again, 5,000 may act as a good support area. So, those who are looking to buy the stock in this corrective move should wait another 100-200-point correction and then one can buy and accumulate as long-term structure is bullish but yes, we may see some consolidation or range bound kind of activity in range of 5,000 to 6,000 for some more couple of month, until some revival sign we do not get from the management. So, 5,000 to 6,000 would be the broader range for the stock. So, buy in the correction would be the strategy for this stock. Your stop loss should be placed at around 4850 if you are buying in the decline.
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