It was a pretty good week apart from a blip on Thursday. How do you look ahead from here?
This week has been very good for the market. Nifty made a strong comeback. After almost six-seven weeks of negative price action, this was the first week where the indices managed to break their previous key swing resistances. This week, the markets have managed to climb the wall of worry and break the previous resistance.
The biggest highlight of the week was that a major underperforming sector – the banking index – made a strong comeback. It gained about 6-6.5 per cent this week. Banking stocks may also see some strong upside in the near to medium term. The reason why Bank Nifty is extremely important is that whenever the banking index goes up, it adds a lot of positive sentiment to many market traders.
The coming week is very important and important. If we manage to maintain the gains and move on them in the first half of next week, there could be a strong possibility of the index rising above the 18,000 mark on Nifty. As far as Bank Nifty is concerned, it can go above 38,000-38,500. The next few days can probably decide whether the market is trending on a momentum mode or whether they will be in some sort of consolidation for the coming days.
If you listen to influential global brokerage firms and leading market experts, this could be a fiscal year. Do you think so too?
well of course. One of the reasons for the fall in the banking index in the last two months was the selling of FIIs in particular. In this brutal sell-off in the last two-three months, none of the big private sector banks were spared and there was a selloff across the board.
Now, when you see the first signs of recovery, we are looking for signals to assess whether the rally or bounce is specific to a certain set of names, whether short covering or long built up. All these patterns should be shaping up for the banking index next week. We have seen many positive formations, short-covering coming back, underperforming stocks like HDFC Bank, Kotak Bank making strong returns for themselves. We are not solely dependent on PSU banking names which were the subject in the second half of 2021. So, these are all positive signs. We can expect the banking index to see more follow-through price action and we do not see the kind of FII sell-off that we have seen in the last two-three months. If we look at these two signs, the recovery could be a very strong fight. The answer to your question in 2021 will be in 2022:
Bank Nifty time has finally come.
What are your top picks for the new week?
I would suggest three buy calls and all are different in terms of the risk nature of the stocks.
Shopping at First Century Textiles. The stock is heading towards a flag pattern breakout on its daily time frame chart and we have seen how the entire sector has also gone into a strong momentum breakout. Hence, Century Textile is likely to be a strong outperformer in the next few weeks; Buy with a target of Rs 1,050 and a stop loss of Rs 900.
From the banking sector, HDFC Bank has made a very strong comeback breaking the 200 as well as the 50-day moving average. Hence, HDFC Bank can continue its momentum and start outperforming the banking sector. We would suggest buy with Rs 1,650 as momentum target and stop loss can be placed at Rs 1,500.
The third one is a very short beta name. This is a purchase on NTPC; After a breakout early last week, the stock has gone into a sideways consolidation, but this could be an interesting indicator breakout for NTPC which could lead the stock back to the 140-145 zone. You can buy with a target of Rs 140 and a stop loss of Rs 127.