Nifty has strong supports, likely to extend rebound up to 17,600 levels

Analysts said the market continues to witness sharp swings even as daily and weekly charts are pointing to the Nifty extending its Friday rebound to the 17,200 levels. While the index could find support at 16,888 levels, the upside is capped at 17,600, analysts said. Ambuja Cement, Trent, Apollo Tyre, ICICI Bank, SBI, Eicher Motors, Maruti, Britannia, Hindustan Unilever, and TCS are some of the stocks analysts suggest for traders.

CHANDAN TAPARIA
ANALYST-DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES

Where is the Nifty headed this week?
The Nifty continued its formation of lower highs on the weekly scale and formed a hammer candle with a long lower shadow. It formed a bullish engulfing candle on a daily scale with a negation of lower highs of the last seven trading sessions, which indicates that supports are visible. However, the major trend is under pressure, with weakness persisting in higher zones. Mechanical indicators are still on a bearish trend, but daily momentum is getting some stability. This indicates that support-based buying could be seen on the decline even after having multiple barriers at higher zones. October has a more positive track record, but shorts with call writing at higher strike indicate the continuation of a bumpy ride ahead. Now, the Nifty has to hold above 17,017 zones for an up move towards 17,250 and 17,442 zones, whereas supports are placed at 16,888 and 16,750 zones.

What should investors do?
Investors can use this move to add good quality stocks from FCMG, consumption, auto, and selective banking stocks. At the same time, traders are suggested to play with options spread rather than taking more leveraged positions. One can go with Bull Call Spread by buying 17,100 Call and selling 17,300 Call to play the bounce towards 17,300 zones. Stock-specific positive stances are seen in Aditya Birla Fashion, India Cement, Ambuja, Trent, and Apollo Tyres.

AJIT MISHRA
VP-RESEARCH, RELIGARE BROKING

Where is the Nifty headed this week?
Nifty has been witnessing correction for the last three weeks in line with global indices. It has retraced from the previous swing high of 18,096 levels and is currently trading at 17,094 levels. Indications favour a rebound above the 17,200 zones. However, the upside seems to be capped in the 17,400-17,600 zone. On the downside, the 16,800-16,650 zone would support if profit booking resumes. Meanwhile, cues from the global markets, especially the US, which is not seeing any respite, would continue to trigger volatility.

What should investors do?
Investors shouldn’t read much into the recent decline and focus on accumulating quality stocks from banking, auto, FMCG, and selectively in IT and pharma. We like ICICI Bank, SBI, Eicher Motors, Maruti, Britannia, Hindustan Unilever, and Sun Pharma from these sectors. On the other hand, we recommend maintaining caution while selecting stocks from the mid-cap and small-cap baskets, as recovery could be restricted only to the fundamentally good counters.

NAGARAJ SHETTI
TECHNICAL ANALYST, HDFC SECURITIES

Where is the Nifty headed this week?
The short-term trend of the Nifty has turned positive with a sharp up move seen last Friday. The bullish engulfing pattern of the daily chart and bullish hammer of the weekly chart indicates a formation of a strong bottom reversal around 16,750-16,800 levels. A sustainable move above 17,200- 17,300 is likely to open the next upside of 18,100 levels in the next few weeks. Any weakness down to 16,800 could be a buy-on-dips opportunity.

What should investors do?
One may look to create long positions during the current market consolidation. Create aggressive longs on the move above 17,300. Sectorally, banking, pharma, IT, and realty are expected to outperform in the near term. Stocks with a positive bias include Axis Bank, IndusInd Bank, Sun Pharma, Dr Reddy’s Laboratories, Coforge, TCS, DLF, and Oberoi Realty.