A decisive breakout above 18,000 may induce a rally towards a new lifetime high: Rupak De

“The long-term uptrend is likely to remain intact unless the Nifty falls below 16700. On the higher end, a decisive breakout above 18,000 may induce a rally towards the new lifetime high,” says Rupak De, Senior Research Analyst at LKP Securities.

In an interview with ETMarkets, De, said “There is a possibility that the Nifty may witness a correction of about 5-6%. However, traders and investors may use those corrections to add positions on the long sides rather than waiting on the sidelines,” Edited excerpts:

What a week for Indian markets – Sensex rose above 60,000 while the Nifty inched closer towards 18000. What led to the price action? Is it FIIs buying which is slowly increasing?
The Nifty50 has continued its northwards journey as FIIs have started to enter the Indian equities once again. The 50 shares Nifty touched 18,000, whereas the Sensex reclaimed the 60,000 mark, on the back of a strong inflow into equity.

The index has been sustaining above the 200-DMA, which is considered a long-term line of polarity leading to the return of global investors who felt left out.

India VIX increased by over 3% in the week gone by as we approach 18K. Any key levels that markets should track in the coming week? Will Nifty50 be able to reclaim 18000-18200 in the August series expiry week?
The fear index, India VIX has remained below 20 during the last week suggesting an overall positive sentiment. On the higher end, 18000-18100 is likely to act as a very crucial resistance.

On the lower end though, 17700 may remain crucial support. A fall below 17700 may trigger a sell-off in the Indian equity.

Therefore, 17700 in the Nifty50 will be a level to track. On the other hand, any decisive rise above 18100 may induce strong buying momentum in the market.

Sectorally, Utilities and power stocks rose more than 3% each in the week gone by. What led to the price action?
Over the past few days, utilities and power sector stocks like Reliance Infra, Adani Power have witnessed a spectacular rally on the back of technical breakout.

The buying remained broad-based as the price rise was backed by a decent improvement in the volume.

The rise above the crucial long-term moving average attracted participation from informed investors leading to a steep gain in the stock price.

Over the short term this space is likely to remain strong and dips are likely to get bought into.

If there are dips in the coming week – should investors do? Buy the dip or wait on the sidelines as there could be further selling pressure?
The Nifty50 has gained a little more than 18% over the last few weeks as the barometer index Nifty has rallied since it made a low of 15183 in mid-June.

The long-term trend has been positive since the Nifty reclaimed its 200-DMA in July-end. However, it is very feature of the market to take an intermediate pause before further movement.

Therefore, after a decent rally, the Nifty50 is consolidating around 18000. On the lower end, 17700 is likely to act as crucial support. Once the Nifty fall below the said level of 17700 it may drift down towards 17400/16950.

Therefore, there is a possibility that the Nifty may witness a correction of about 5-6%. However, traders and investors may use those corrections to add positions on the long sides rather than waiting on the sidelines.

The long-term up trend is likely to remain intact unless the Nifty falls below 16700. On the higher end, a decisive breakout above 18000 may induce a rally towards the new lifetime high.

Where is smart money moving when it comes to trading? Which stocks are traders’ favourite in the week gone by?
During the week stock like Adani Port, ZEEL, IRCTC, Ambuja Cements, Tata Chemicals, etc remained the flavour of the smart money buying list.

Metro Brands, Adani Power rose by about 40% in a week in S&P BSE 500 index. What led to the price action, what does the technical suggest? What should investors do?
Metro Band had given a 6-month long trading range breakout in the first week of the current month which led to a magnificent rally in the stock price in August. The stock trend remains strong dips can be bought into as the price is likely to move back to the higher level when the recent consolidation ends.

Adani Power had given a swing high breakout on the daily chart which led to the steep rise in the price. The trend looks positive any dips can be bought into as the price is likely to move back to the higher level when the recent consolidation ends.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)