Nifty could move towards 17,500; crucial resistance at 18,000: Swati Ananda Hotkar

“I am giving two short calls; one is on Muthoot Finance. Yesterday, the stock gave a breakdown of 50-DMA. It is currently trading below that level. I believe more selling pressure is likely to be seen in Muthoot Finance. So go short at the current market price. Another stock I am looking for on the short side is Britannia. For the last three days, we are witnessing lower tops and lower bottom formations and is on the verge of giving a breakdown of 20 DMAs as well,” says Swati Ananda Hotkar, AVP-Equity Technical Research, Nirmal Bang Securities.

What is your view on the market after three-four days of continuous selling?
As of now, the view on the market is a little bit cautious because of the Covid news. Yesterday, Nifty broke its 50-day moving average and today it has touched its 100-day moving average which comes at around 17,850 levels. Somehow as of now, Nifty has managed to take a support but if it breaks that level, then it might take Nifty towards 17,500. On a higher side, 18,000 will act as a crucial resistance zone.

Initially it was considered as a support but now going ahead, it will act as a resistance level. As long as Nifty will trade below the 18,000 psychological mark on the closing basis, we will remain cautious. As of now, we are witnessing a volatile trading session with immense pressure into the market because of the Covid news.

One should stick to the market with quality stocks and trade with strict stop losses. On Friday, Bank Nifty had given a breakdown of 42,000 psychological support level marks which gives a very cautious side indication on the technical front. This rally is likely to be extended on the downside towards at least minimum 41500-41200 levels. So, these are the targets I am looking for between the coming weeks.

The view on both the indices will remain cautious and stock specific. The market breadth is not doing very well. The 1:4 ratio is there. So the overall view is a little bit cautious. We are not initiating a major long position in this kind of a market because we believe that the downfall is likely to be continued in the coming week as well.

Considering this view, today I am giving two short calls; one is on Muthoot Finance. Yesterday, the stock gave the breakdown of 50-DMA. It is currently trading below that level. I believe more selling pressure is likely to be seen in Muthoot Finance. So go short at the current market price. It will reach up to Rs 1,000 to 990 levels in the coming one to two trading sessions. So, one can go for short at the current market price and stop loss can be kept at Rs 1,080.

Another stock I am looking for on the short side is Britannia, which has given a very good rally in the past few weeks but for the last three days, we are continuously witnessing lower tops and lower bottom formations and today it is on the verge of giving a breakdown of 20 DMAs as well. I believe we are likely to witness more profit booking into this particular stock and one can go for a short at the current market price. Stop loss can be kept at Rs 4,260. I am looking for a target of Rs 4,400-4,380 levels and those levels are the future levels just keep in mind.

Given the fact that you have a very cautious stance for the coming week do you think it is better to play the large cap names and the small cap names will be under pressure or do you expect a bit of a recovery given the fact that we have seen sharp cuts in the small cap, midcap space?
As of now we are just staying away from the small caps and the midcaps because we are not finding any good rally into this particular counters. I will suggest to all the clients that stick to the quality stocks large cap stocks only whether this kind is just a price correction. I am saying that because we have seen a very good amount of rally into the largest cap so the profit booking cannot be denied at the higher level.

Let the market settle down, no need to be a major chaos at the current levels. The largecaps momentum rally is likely to be continued in the coming trading session, which is concentrated in largecaps itself because whenever the Nifty and the Bank Nifty start giving the pullback, these stocks will be the first to participate in pullback rally. So better stick to the largecaps..