Nifty could struggle in 17,800 – 18,000 zone this week; 3 top trading ideas: Mehul Kothari

A strong week for Indian markets. Sensex, Nifty rose by about 2%. What led to the price action?
Although a bit volatile but yet again the domestic markets remained optimistic throughout the week. The benchmark index, Nifty50 rose by over 1.5 per cent and reclaimed 17,900 amid the positive global cues.

Recovery in the world markets along with fresh buying by the foreign institutional investors (FIIs) in the cash market boosted the local sentiments. On the lower end, the Nifty50 took a dip near 17500 and from there it recovered.

Will Nify50 be able to hit 18000 and beyond in the coming week or we could see some consolidations ahead of the US Fed meet?
Although the benchmark index remained positive during the week, outperformance was witnessed in individual stocks.

The Midcap and Smallcap indices outperformed others. Technically, for the Nifty, 17800 – 18000 could be the struggling zone wherein we could witness profit booking due to global uncertainty.

At the 18,000 zone, we are witnessing a trend line resistance and we have a huge built up in 18000 CE option (weekly series).

Thus, with regards to the index, we advise traders for fresh long only above 18000 mark and that too on a closing basis.

In such a scenario, we could see an extended move towards the 18150 – 18250 mark. However, the overall price action indicates the possibility of some distribution at higher levels.

There is no confirmation for the same on the charts, but we still advise traders to remain cautiously optimistic. On the downside, 17500 would be a key support for the coming week.

A breach of the same might apply brakes to the ongoing euphoria.

Small & Midcap stocks outperformed Sensex in the week gone by. What is powering rally in this broader market space?
As mentioned above, FIIs have started buying in the market and that has boosted the sentiments. On the other hand, the Nifty has been consolidating and that is why the traction was missing in many heavyweights except the banking stocks.

This could be the reason we witnessed outperformance in the broader markets.

What is your call on Nifty Bank? Which are the important levels one should watch out for, and any stocks which are looking interesting?
With regards to the Nifty Bank index, it has cleared the 40,000 mark with ease and has also closed above the same. This could be a sign of fresh strength for the index, but we are observing a spinning top candlestick pattern on the daily time frame.

Thus, fresh buying would be advisable only above the high of 40685. On the other hand, a breach of 40280 might activate the pattern and we could see some dip in the index towards 39500 – 39000.

On the stock front, PSU Bank was looking attractive but in the recent session, we observed some profit booking at higher levels and hence one should be highly selective in them.

Cement stocks were in focus in the week gone by – and JKLakshmi rose by about 20%. What should investors do – time to book profits or wait for the dip?
Although the sector outperformed if we look at the larger time frame then the cement stocks have rallied a lot from the bottom and there should be some cool-off.

Thus, traders should wait for a considerable dip in them to go long but investors can continue holding them since the trend still remains strong.

Please suggest 3-4 trading ideas for the next 1 month.


Here are 3 short-term trading ideas —


Metropolis Healthcare: Buy near Rs 1480| LTP Rs 1484| Target Rs 1620| Stop Loss Rs 1410| Upside nearly 10%

Like other diagnostic stocks, even Metropolis was under corrective mode for many months. In recent sessions, the stock has confirmed a higher top formation on a daily scale.

We are witnessing a double bottom formation and that indicates the formation of the bottom. Thus, we advise traders to buy the stock near 1480 for the target of 1620 in the coming sessions.

Raymond:
Buy near Rs 1020| LTP Rs 1034| Target Rs 1100| Stop Loss Rs 980| Upside 8%

After consolidating in a range for more than 3 months,

has finally managed to confirm a breakout above the Rs 1015 mark.

The price action was supported by enough volumes, and we all witnessed a major breakout in daily RSI (14).

Thus, we advise traders to buy the stock near 1020 for the target of 1100 in the coming sessions.

Dhanuka Agritech: Buy near Rs 710| LTP Rs 724| Target Rs 770| Stop Loss Rs 680| Upside 8%

Since November 2021, Dhanuka has been trading sideways to slightly negative. However, the stock has broken out of the range as per price action.

The price action resembles descending triangle breakout and that could trigger a faster upside. Along with the breakout, the counter has managed to close back above its 200-Day exponential and simple moving average.

Thus, we advise traders to buy the stock near Rs 710 for the target of Rs 770 in the coming sessions.


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)