Nifty down over 1,000 points from its peak; watch out for 17,775 level next week: Mehul Kothari
In an interview with ETMarkets, Kothari said, “Once these levels are taken out, then we expect a further correction of 2–5% in the indices.” Edited excerpts:
The first week of January started off on a negative note. What led to the price action?
Since the last week of November 2022, we have been of the view that heavy profit booking is likely in the markets backed by our analysis of FIIs long-short ratio in the index futures.
In line with that, Nifty50 index has corrected more than 1000-1200 points from its peak. The correction in the recent week, too, was a part of the same.
There are no specific triggers for this. The markets were overheated, and this move was needed for a sustainable upside in the coming months.
Do you see the weakness continuing in the second week as well. What are the important levels that one should track for Nifty and Nifty bank?
At this point in time, both Nifty and Bank Nifty are hovering near their recent lows. For Nifty, a fresh round of selling would emerge below 17,775 whereas for Nifty Bank, the support is placed at 41,500.
Once these levels are taken out, we expect a further correction of 2–5% in the indices.
Any particular strategy that traders can deploy on Nifty ahead of Budget?
So far things are looking dicey but there is a possibility of some relief ahead of the Budget. The zone of 17,500–17,250 could be a chance buy for traders since that is the placement of 200-day EMA and SMA.
From there, we might see a decent rally ahead of the Budget but once that happens then the longs should be booked. We don’t expect any unidirectional move for some more time in the markets.
Infra, as well as the industrials index, rose more than a percent – are we seeing a pre-budget rally?
Yeah, indeed they witnessed some temporary traction in an anticipation of a pre-budget rally, but the actual rally might be seen once Nifty reaches its 200-Day moving average.
Utilities and IT fell more than 1% — what led to the price action?
It seems that the ongoing uncertainty in the universal IT industry could be one of the reasons, for some disturbance in Indian IT stocks. Also, the result expectation have again made them a bit vulnerable.
IT companies will be declaring results in the coming week. How should one play ahead of results on Monday, , and on Thursday?
With regards to TCS, 3,150 is crucial support for the coming sessions. A breach of the same would confirm fresh downside momentum. Traders holding longs should follow a stop loss of 3,150.
Others should avoid TCS and Infosys for fresh entry. Only HCL Tech looks a bit stable near 200-day moving average.
Even
will join its peers for downside if it fails to sustain above 1,000. Thus, we have a wait-and-watch stance for the entire IT pack.
Any 2-3 trading ideas for the next 3-4 weeks?
Here are a few trading ideas for the next 3-4 weeks:
: Buy near Rs 610| Target: Rs 670| Stop Loss Rs 570| LTP Rs 609| Upside 10%
HDFC Life has confirmed a range breakout above the 600 mark. The breakout resembles a bullish inverse head and shoulder pattern.
The price action is supported by humongous volumes and the stock has cleared the high of the previous quarter. Thus, we advise traders to go long in the stock in the range of 615 – 605 with a stop loss of 570.
Life Insurance: Buy near Rs 468| Target Rs 510| Stop Loss Rs 450| LTP Rs 471| Upside 8%
ICICI Prudential has been in a corrective mode for the past few months. Recently the stock retested the previous support of 440.
We are witnessing a triple bottom formation near 430 and hence we expect a fresh upside in the stock. Thus, we advise traders to go long in the stock in the range of 470 – 466 with a stop loss of 450.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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