Edited excerpts from a chat in which the analyst also reads the charts for Nifty and Nifty Bank traders.
What are the charts looking like for Nifty which has shown support near 24,200-level? Do you see a range-bound movement in the week?
Early last week, the conditions were ripe for a swing lower, not only due to persistent overbought conditions, but more because how far Nifty stayed above the 20 day SMA. However, after being 3% away, which is an extreme, a pause ensued in the uptrend, allowing the moving averages to catch up, reducing the urgency for a mean reversion down move. This explained the swings on either side through most of the days last week, which also reflected in a soft directional moving indicator. All this had limited our upside objective to 24400 or 24500, but weekly candles persistently staying above two standard deviations suggest that upsides have more room. Towards this end, we would start the week, with expectation of extension in uptrend aiming 24500 or 24720-800. Downside marker is placed near 24250, but we will wait for slippage past 24130 to abandon the upside view.
Nifty Bank’s fate seems to be tied with HDFC Bank due to its sheer weightage. How do you see both – the stock and the index – moving forward next week?
Nifty Bank appears less poised for an uptrend. It is weighed down not only by HDFC Bank, as 50% of the index constituents are still below their respective 10-DMA. While it shows potential for upmove, it is worrying that so many have not yet participated in the recent uptrend. We will begin the week needing to push above 53200, or atleast 52800, in order to pursue upsides aiming 54200, but we believe that such a move will take a while to form, though we do not see clear possibilities of an outright collapse in the interim, with strong support seen near 51950. Meanwhile, we see the declines in HDFC Bank as something that has happened against the run of play, and could be considered as an aberration in the broad upside structure. We will keep this view as long as dips do not extend beyond 1570, while a direct rise above 1680 could set up the stock for rapid upmove towards 2030.
Pharma and IT indices were among the top sectoral gainers for the week. Do you see the momentum sustaining?
CNX IT index extended upside towards 37800 from 35200 and is on its way towards 38500 levels. The bounce back was backed by gains in stocks like TCS, HCL Tech, Wipro, LTI Mindtree, Tech Mahindra and Persistent gaining an average 15% in June. We expect them to continue upside down. Supertrend and MACD signal break seen in the weekly time frame and as earnings season is about to kick start next week, our expectation remains positive.
CNX Pharma index has seen a range breakout in monthly time frame and a Marubozu candle in the weekly periodicity along with MACD signal break all favoring the ongoing upside to continue. Once past 20800, we should easily navigate towards 24000. The avg. 14D RSI of 70% of the pharma stocks is around 50 which is giving more room for the stocks on the upside. Expect Lupin, Zydus Life, Granules, Torrent Pharma and DRL, which form around 27% of the Index, to lead the upside.
3 PSU defence shipbuilders – Mazagon Dock, GRSE and Cochin Shipyard – were the biggest gainers this week. What are the targets for this week as Budget comes closer?
The current upside that started in April 2024 in Mazagon looks similar to the one we saw in April 2023 which gained around 260% in the next six months and was followed by six months of lull. This time we have gained around 220% in four months since April 2024 and if it follows last year’s trend, we should expect Rs 6,700 levels before we move into a consolidation phase.
GRSE and Cochin Shipyard look too stretched as far as monthly momentum indicators are concerned. However, Fibonacci extension is pointing towards Rs 3400 for Cochin Shipyard before the consolidation phase kicks in. It would be wise to stay away from GRSE though.
Give us your top ideas for the week.
BLUESTARCO (CMP – 1705)
View – Buy
Targets – 1775 – 1830
Stoploss – 1644
The stock has been in a corrective mode since the second part of June and saw an attempt to bounce back. This MACD histogram has seen bullish exhaustion in daily time frame and it has made a new all time high this week all riding in favor of much bigger moves in coming days. We expect the stock to move towards 1775 and 1830 in the next few weeks. All longs may be protected with stoploss placed below 1644.
DEEPAKNTR (CMP – 2688)
View – Buy
Targets – 2820 – 2978
Stoploss – 2579
The stock has been on an upside since 2022 and has broken above more than 1.5 year high this week. In the monthly time frame, it has seen a Supertrend breakout and a MACD signal break in monthly periodicity hinting at positivity in coming days. We expect the stock to move towards 2820 and 2978 in the next few weeks. All longs may be protected with stoploss placed below 2579.