By Ajit Mishra
Markets have been witnessing consolidation in a narrow range for the last two weeks amid mixed cues. The prevailing uncertainty on the global front and underperformance of the banking index, which holds considerable weight in the index, are capping the upside however index majors from the other key sectors like auto, FMCG and realty are helping in keeping the tone positive. Though Nifty surpassed the hurdle at 18,700, it couldn’t sustain and closed at 18,601.50 levels on Monday. Amid all, the continuous outperformance of the broader indices is offering ample trading opportunities.
As we are getting mixed signals closer to the record high, we suggest staying selective and focusing on the key levels of the Nifty and Bank Nifty to gauge the market mood and plan trades. We feel the prevailing outperformance may continue in the broader indices so continue to add quality stocks from midcap and smallcap space. We have also shared a list of stocks across sectors, which can be considered for trading based on the market trend.
Nifty (CMP: 18,601.50)
We recommend maintaining a positive stance till Nifty holds 18,400 and suggest focusing on sectors, which are showing relatively higher strength like auto, FMCG & realty and picking selectively from others. In case of a decline, the 18,100-18,200 zone would offer the needed cushion.
Bank Nifty (CMP: 43,944.20)
The banking index has been forming indecisive candles for the last week or so and currently trading closer to the crucial support of short term moving average i.e. 20 EMA on the daily chart. A mixed trend among the banking majors, especially the private banks, is keeping the participants guessing over the next directional move. Technically, a decisive close for Bank Nifty above 44,500 would again fuel the momentum and help the index to inch towards the 45,100+ zone soon. On the flip side, a breach of 43,400 would change the tone from sideways to bearish for the short term. Amid all, traders should limit positions and wait for clarity.
Stocks to Watch
Bullish – Ashok Leyland, Axis Bank, BEL, Bharat Forge, BPCL, L&TFH, Motherson, NTPC, Tata Communications
Bearish – Hindalco, Jindal Steel And Power, UPL, Zee Entertainment Enterprises
(Ajit Mishra, SVP – Technical Research, Religare Broking. Views expressed are the author’s own. Please consult your financial advisor before investing.)