Q) The week gone by was controlled by the bulls as the Nifty climbed above 11,900. What led to the price action on D-Street?
A) The Nifty50 continued to face resistance near the 12,000 level and witnessed a pullback with some corrective action. This led to some sector rotation among the sectors, keeping the broader markets upbeat with positive momentum in midcaps and small caps.
The Nifty50 gained by 1.4 percent while midcaps and small caps outperformed to gain by 3.1 percent and 2.6 percent, respectively, for the week. The banking sector was the largest gainer up by 4 percent led by private banks and NBFCs.
The auto sector also led the gains on Friday (October 23) as higher sales were expected during the coming festival season and stimulus expectations from the government in the form of a scrappage policy.
Q) As we approach the last week of October, also the expiry week, which are the important levels that one should be tracking? Any event to watch out for?
A) The bias continues to remain positive with respect to the positive weekly close of Nifty50 and holding the support levels of 11,750 despite global volatility.
We believe that the crossover of 12,050 levels would give an extended p move to test the all-time high levels near to 12,400 levels.
Being the derivatives expiry week, there could be individual sector and stock-wise move due to rollover movements and second-quarter results. The trend reversal level will be 11,700, being the short-term average and two weeks’ low.
Q) Even though the benchmark indices moved in a range, we saw bigger price action in small and midcaps. What are your views on the broader market? Small and midcaps usually perform better in the run-up to Diwali and in the December quarter.
A) The small and midcap indices have started to outperform in the current week after a lag of three weeks as earnings are expected to be better than expectations and crossover of the long-term averages have led to sharp outperformance.
We believe it will continue to outperform as valuations are trading near the long-term averages on PE multiples and P/BV multiples. We expect the Nifty Midcap 100 index to scale to 18,500 levels by the end of the calendar year.
Q) Sectors like realty, telecom and metal stocks led the action on D-Street. What were the factors that led to the price action?
A) The realty sector gained momentum as positive news flow of surge in housing demand in various metros, lower interest rates and expectations of an increase in prices led the realty index to gain by 9.3 percent for the week. The metals sector, too, remained positive stride as the dollar index has slipped below 93 levels and commodities prices are on a upswing, trading at two-year high on optimism around a US stimulus package and supply disruptions leading to increased demand.
Q) Top technical trading ideas for the next three-four weeks?
A) Here is a list of stocks for the next three-four weeks:
The stock has closed in an inside range on monthly expiry and we expect a strong reversal breakout on the higher side.
It has closed at a 10-days high with strong volumes and RSI trading above the average line for the last couple of weeks.
The prolonged range bound move and crossover of the long-term averages will witness a sharp upmove.
The stock has witnessed a sharp correction from the recent high of 645 levels it tested in July 2020.
It has formed a higher bottom on monthly charts and is indicating positive price momentum to gain by 3 percent w-o-w.
The current upmove will again test its 200-day average placed near 580 levels over the next few weeks.
The stock has made a double bottom near 155 levels and witnessed a sharp reversal with strong volumes over the past few days.
The key technical indicators RSI is trading above its average line have also reversed turning upwards poised for a breakout from current levels.
Thus, for trade, a long position can be initiated for the target of Rs 185 with a stop loss of Rs 152.
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