Considering continued selling as weak rupee sends FII fleeing, how do you plan to trade Nifty on January expiry?
Since hitting its all-time high, the Nifty has been steadily declining, with a correction of around 5% so far. This sharp correction, driven by continued FII selling and a weakening rupee, has pushed the index below the 200-day moving average for the first time in almost a decade. Sentiment around Indian equities has turned decidedly negative as a violation of the 200-DMA often erodes investor confidence in the long term. I think the correction has even more downside potential, with the index likely to continue rising as long as it remains below 25,500. On the other hand, the Nifty could drift lower towards the 24,700-24,400 zone.
Over the last fifteen years, the Nifty has averaged negative returns of 0.52% in the week leading up to the Budget and closed higher only eight times. What does the process look like this time?
I fear that the Nifty will reflect or even strengthen the trend this time too. Three of the four major indices that led the November-December rally struggled in January. As a result, sentiment is likely to remain weak at least until the Budget. Only announcements of meaningful structural changes in the budget can help change the market mood in February.
How difficult will trading be on Budget Day because of the Sunday factor?
I expect the market to behave as usual. Since trading will remain open on Budget Day despite it being a Sunday, there are likely to be sharp swings around major announcements. However, I don’t expect Sunday’s Budget to add to the excitement or dampen sentiment significantly.
Shares of Kalyan Jewelers fell 21% this week on speculative reports of mutual fund sales. Do you see an upturn on the horizon?
Recently, the stock has seen a sharp decline, with buyers sitting on the sidelines amid institutional selling. It looks like a falling knife, and I would rather wait a few more days than be among the early buyers. On the technical front, the stock has fallen below the Fibonacci retracement level of 61.8% and is approaching the 200-week moving average, which currently stands at 344. An upswing can only occur if the stock does not definitively fall below the 344 level.
Real estate stocks were the biggest losers last week. What does the graph indicate: more pain ahead or relief?
I expect the selling pressure in the sector to continue in the short term. On the other hand, the index could drift towards the 657 level, from where a rebound could emerge. However, at current levels it does not seem an attractive entry point. Give us your top trading ideas for the week, taking budget into account
Buy CHENNAIPETRO 842 | SL820 | TGT 880
The stock has managed to stay above the 20-day EMA despite a broader market sell-off. The RSI has formed a positive crossover, indicating improving momentum. The short-term trend could remain strong, with potential upside towards the 880 level, where the 50-day DMA is placed. On the other hand, a break below 820 could weaken the trend.
Buy ASHOKLEY 192 | SL 187 | TGT 205
The stock has shown a consolidation breakout on the daily chart, indicating the possibility of a near-term rally. It also remained consistently above the 20-day EMA on the daily time frame. The RSI is in a bullish crossover and trending higher. The short-term trend could remain strong, with potential upside towards 205, where the 50-day DMA is placed. On the other hand, a break below 187 could weaken the trend.
Buy MAHABANK 65.65 | SL63 | TGT 72
The stock has remained strong over the past several sessions. On the weekly chart it remains above its breakout level, while on the weekly chart the RSI has formed a bullish crossover. The short-term trend could remain positive, with potential upside towards 72, where the 50-day DMA is placed. On the other hand, a break below 63 could weaken the trend.
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