"The medium-term trend can soon turn back on upside for Nifty50 and we might turn bullish first before touching 16,000 levels," Ashish Kyal, Founder and CEO at Waves Strategy Advisors says in an interview with Moneycontrol.
Over the short term, he says one can expect more consolidation with support near 16,650 levels. "We are yet to see a break above resistance of 17,350 which will be the first sign that the downtrend is maturing and positive reversal can be expected."
On the auto space, the Chartered Market Technician with strong expertise in Elliott wave analytics says the recent correction over the past few weeks is with momentum and so he might see another 5 percent to 7 percent dip from here on.
From a long-term perspective, these corrections can be a good opportunity to add on to quality stocks in a staggered fashion, he believes.
For next month, his top 3 picks will be ITC, Cyient, and Sun Pharma.
The market seems to be in a consolidation mode after recent correction. Do you expect the Nifty50 to break 16,000 first in coming weeks, before getting into bullish mode?
Nifty topped out in December 2022 after touching lifetime high levels of 18,887 levels. It has corrected nearly 11 percent from the highs and has taken 79 trading sessions to reach 16,820 levels. On contrary, the rise from 16,820 to high of 18,887 took only 39 trading days prior to December 2022. This shows that the rise was faster less time consuming whereas the fall is slower.
This simple way of looking at price and time indicates the medium term trend can soon turn back on upside and we might turn bullish first before touching 16,000 levels.
Over short term we can expect more consolidation with support near 16,650 levels. We are yet to see break above resistance of 17,350 which will be first sign that downtrend is maturing and positive reversal can be expected.
Are you taking positions in auto space that corrected more than 10-11 percent from high on February 1 and is looking oversold now?
Auto stocks have faced the heat of rising interest rates and has shown correction since September 2022. Prices – wise we have seen nearly 11 percent down move. Recent correction has over past few weeks is with momentum and so we might see another 5 percent to 7 percent dip from here on.
From long term perspective these corrections can be good opportunity to add on to quality stocks in staggered fashion. The interest rate cycle might also peak out soon. But any buying should be done with perspective of atleast 1.5 to 2 years as we can see consolidation for 3 to 6 months. A few stocks from the space that can be a good bet are Maruti, Eicher Motors.
What are the chances of Bank Nifty hitting its September 2022 lows?
Bank Nifty has actually shown outperformance as compared to Nifty during the fall from the top. Nifty is very near to the September 2022 lows but Bank Nifty is still 5 percent away from there. There has been lot of negative news flow over past two weeks after the collapse of US Banks but the positive sign is that Bank Nifty has still managed to not correct much so far. This indicates short term negative news is getting digested but Bank Nifty support at 38,600 should remain protected.
If this support level is broken then the selling pressure can intensify taking near to 37,700 which is September 2022 lows. Immediate hurdle on upside is at psychological 40,000 levels. For now, it is wait and watch scenario. Any sustainable move above 40,000 will indicate short term low is in place but Bulls have to really prove their worth by taking prices above it else Bears will dominate again.
Do you think the Nifty IT has formed double bottom now and may consolidate around current levels before going for a big upmove as currently it is at oversold levels?
Nifty IT index had been the strongest sector until the top made in January 2022. The sector rose by whopping 250 percent from lows of March 2020 till January 2022. Such sharp rise is followed by 33 percent correction from the top is a healthy sign. Also Nifty IT has formed double bottom with positive divergence on indicators suggesting that we are now in process of forming a base before reversing back on upside.
Nifty IT index is trading near 28,000 with important support at 26,200. So short-term consolidation is possible in a broad range, but eventually, this index can again start outperforming. Any move above 30,000 on this index will be first sign of a positive breakout.
Will the Nifty FMCG continue its consolidation for few more weeks?
Nifty FMCG sector has shown least amount of correction price wise. When Nifty is down by 11 percent from the highs, Nifty FMCG corrected less than 3 percent. During economic slowdown or turmoil, it is usually defensive sector and stocks that start outperforming; we can clearly see this over here. Nifty FMCG is the best place to be in right now as it is getting ready again to move back on upside.
Do you expect more upside in Finolex Cables and Sonata Software which rallied nearly 50 percent since the start of current calendar year?
Finolex Cables rose nearly 400 percent and Sonata Software rose 650 percent from the Covid lows made in March 2020. These stocks have recently shown near vertical rise. The momentum in these stocks is still strong. Such outperformance when the broader market is correcting is sign of strength and it is best to use dips to enter into these stocks.
However, one should trade these stocks with strict stop-loss as during such exponential rise the reversals can also be sharp and fast. Finolex Cables has important support near Rs 680 and Sonata Software has support near Rs 700 levels. As long as these supports are intact momentum traders can use dips to enter into these stocks.
Which are the 3 stocks ideas to bet on for next one month?
For next month my top 3 picks will be ITC, Cyient, and Sun Pharma.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
