Do you think now the market is firmly in an uptrend and Nifty will continue to stay above the 16,000 mark or are there still some signs of weakness that might creep in?
It is not really an uptrend, but we are getting into a consolidation phase, where I would expect the recent low of 15,700 to hold on. Overall, we get more confirmation of the trend being positive once we cross 16,800 levels. That is the price point which I would be watching out for in terms of a momentum shift, and then once we cross that, we go to the 17,500 mark.
If we look at the price action, before the Russia-Ukraine invasion we were holding around the 16,800 level. We made three bottoms, and also saw a bit of consolidation. There was no clarity whether it would break out or not. And then we saw a sudden gap down to 16,200. That is where we again paused for a couple of times and then we saw another gap down and went to 15,700.
In the last four sessions we have seen a good recovery. 16,400 is what I will keep a stop loss on the long positions right now and continue to hold on for it. We have seen a reversal candle from the lows which is what we call a morning star pattern and now post we cross 16,800 we could expect a move all the way to 17,500 as well. So for now, we will keep a stop loss at 16,400, and watch for momentum above 16,800.
What is your sense as far as Nifty Bank is concerned? Any particular counter which looks interesting from that space; and overall for Nifty Bank what are the levels to watch out for?
For Bank Nifty, we have seen the amount of selling which is there from the FIIs has been the highest since 2008. In terms of Bank Nifty at 32,500 to 33,500, we get back to the price points we were pre-COVID. Also, we are where we were one-and-a-half year ago. So at these prices the risk reward is great and if you were to remove the move which happened in SBI and ICICI bank over the last 6 to 12 months, we are at 30,000 Bank Nifty.
So in the Bank Nifty space, I would expect this 32,500 mark to hold on. The top picks going forward for me are SBI, ICICI Bank and Axis Bank. These are the three names which continue to be leaders.
Kotak Bank and HDFC Bank are no more the leaders.
What are the top picks for next week?
Given that it is an event-heavy week with global events and geopolitical crisis, I will go with two stocks which are more India-focussed and they have started showing strength in terms of price action. First is a buy on ITC. This is a stock which has gone sideways forever and for the first time it has started showing relative momentum as well as absolute momentum. The stock is up on a daily basis for the last 10 days even though marginal slow and steady. The stock is on the verge of a breakout above the recent three months highs as well as on a trend line breakout, expecting it to go, test its recent 52-week high of Rs 260-265, stop loss at Rs 228. Second is a buy on PVR opening up theme. The stock is closer to the recent swing high around that Rs 1,700-1,713 mark. I would expect it to give a breakout above those levels in the coming week, stop loss at Rs 1,650 and a target price of Rs 1,850.
