DHARMESH SHAH, HEAD — TECHNICALS, ICICI SECURITIES
Will indices and Bank Nifty see a bounce-back next week?
We believe extended correction from here on would offer an incremental buying opportunity as we do not expect the Nifty to breach the key support threshold of 14,300 followed by consolidation in the broad range of 14,900-14,300 wherein broader market would extend its relative outperformance. Bank Nifty has a strong support at 34,000 levels, which we expect to hold and consolidate in the 34,000-36,000 range in coming weeks.
What should investors do?
Any dip from here towards 14,300 should not be construed as negative as the index retraced 13 per cent post budget rally, which consumed 11 sessions, by 50 per cent in 10 sessions, indicating a healthy pace of retracement. Instead, investors should capitalise it to accumulate quality large cap and mid-cap stocks.
Which are the sectors/stocks investors can buy or should avoid at this juncture?
Sectorally, we expect PSU, Metal, Capital goods and Infra to outperform. And quality stocks like Tata Steel, Adani Ports, Elgi Equipments, HAL, Amber, Tata Chemicals, PNC Infratech, Deepak Nitrite are expected to relatively outshine.
GAUTAM SHAH, FOUNDER, GOLDILOCKS PREMIUM RESEARCH
Will indices and Bank Nifty see a bounce-back next week?
The trading action of last week has dented the set-up quite a bit. The index is now close to the major support zone of 14,350-14,450 from where a temporary trading rebound is likely. This is only on account of the market being oversold. But rallies are unlikely to sustain and will get sold into. The area of 14,700-14,800 should now act as a major resistance. A test of 13,950 and even 13,700 cannot be ruled out and one should be prepared for the same. US markets look weak for the first time in a long time and it could impact India.
What should investors do?
Investors are advised to stay cautious and conservative. The market is retracing/digesting the big rally of the last many months. Such counter trend corrections within a bull market can sometimes last for a few weeks. We see a trend of the large-caps taking the backseat while mid-caps/small-caps outperform in March. One will have to be very stock/sector specific to generate alpha. Ignore the headline index, concentrate on stocks exhibiting relative strength.
Which are the sectors/stocks investors can buy or should avoid at this juncture?
PSU basket is the new emerging theme that is here to stay and has more juice left. We see continuing strength. NSE Energy and Metals index are other segments where we see opportunities on the long side. Insurance stocks are also likely to remain firm. Buy on dips is advisable in autos and banking.
CHANDAN TAPARIA, DERIVATIVES ANALYST, MOTILAL OSWAL
Will indices and Bank Nifty see a bounce-back this week?
Nifty remained highly volatile in the last week as it witnessed a roller-coaster ride with emergence of selling pressure on every bounce due to weakness in global market. Surge in VIX has given a grip to bears and is likely to put pressure on the market at any bounce but after the decline of around 1,000 points a bounce cannot be ruled out from lows.
Technically, Nifty formed a Bearish Island Reversal Gap pattern on a daily time frame with gap up and gap down near to 15,008-15,065 zones in the last two sessions. Now till it remains below 14,750 zones, overall weakness could be seen towards 14,300 zones and bounce could be restricted. Till Bank Nifty remains below 35,500 zones, weakness could be seen towards 34,000 and 33,333 zones while on the upside, key hurdle exists at 36,000 zones.
What should investors do?
Traders should reduce their overleveraged position as the market is finding some pause in positive momentum, but investors should use this decline as a buying opportunity or continue with their systematic investment plans.
Which are the sectors/stocks investors can buy or should avoid at this juncture?
We are positive on insurance, metal, fertilisers and selective power stocks while weakness could be seen in banks, financial and selective crude-related stocks.
