Nifty rally may hit a hurdle around 17,550

Technical analysts expect the Nifty to face resistance around 17,550 and the index may see a correction towards 17,150 if it fails to sustain above 17,490 levels. However, they said upward momentum would continue in pharma, IT, and FMCG stocks.

ASHISH CHATURMOHTA
HEAD OF RESEARCH-ADVISORY, JM FINANCIAL SERVICES

Where is Nifty headed?
Nifty has seen a rally of 15% from mid-June low of 15,183 to this week’s high of 17,490 in the last 7 weeks. It has reached key resistance and retracement level in the region of 17,400-17,490 and is facing resistance. Once Nifty crosses and sustains above 17,490 levels, the rally will continue towards 17,750-17,800 levels, where the falling resistance trend line starting from October 2021 high and connecting the lower peaks of January and April 2022 is seen. On the downside, last week’s low of 17,150 is the immediate support. A break below 17,150 will see a correction towards 16,800 and 16,650 levels.

What should investors do?
The market is at a critical juncture, and it is seeing some profit booking, but it is getting bought as seen in late intraday recoveries last week. Thus, market participants can continue to hold on to their positions as the market continues to make new highs. However, short-term investors and traders will be advised to lighten their positions on breaches below 17,150 levels. Medium- to long-term investors can continue to hold on to positions, and in case of any correction, they can buy on dips. We like ICICI Bank, Sun Pharma, Maruti, Tata Elxsi, SRF, and Bharat Dynamics with medium- to long-term views.

ABHILASH PAGARIA
HEAD, ALTERNATIVE & QUANT RESEARCH, EDELWEISS

Where is Nifty headed?
With the strong support of FIIs, the overall momentum is positive, and some leg of profit taking can be seen in the truncated week. Currently, Nifty is hovering around the 78% retracement of the April and June decline, which is near 17,500. With the index posting a positive weekly close for the third consecutive week; and now, as per our in-house quant model, the strong rally can see some pause.

What should investors do?
We expect Nifty to face resistance around 17,550 levels, which can be used as a good opportunity to build near-term short bets with 17,650 as a strict stop loss with a target of 17,150. The upward momentum should continue in our high conviction Nifty50 and Nifty IT probable of September semi-annual index inclusion such as Adani Enterprises and Persistent Systems. Within mid-caps, Tube Investments will do well on the upside. Alongside metal, the index can see a 4-5% downside from current levels.

VIRAJ VYAS
TECHNICAL & DERIVATIVES ANALYST, ASHIKA STOCK BROKING

Where is Nifty headed?
The index witnessed a sharp run-up from July 27 till about last week, when we started to witness signs of the momentum losing pace. Price-wise, the index has approached 78.6% retracement of the fall (18,114-15,183), and given the fact that we are unable to close above the 17,500-mark, the index is likely to retrace towards the 61.8% mark, which is coincidentally a strong psychological support, i.e., 17,000-mark. The index has formed a higher high and higher low structure; hence, a move towards 17,000-level cannot be ruled out.

What should investors do?
Investors should stay put as long as the 17,000-mark is intact. In fact, as long as 16,800-17,000 is held, the index remains a ‘Buy on Dip’ as long as they continue accumulating quality stocks in such dips. Over the next few days, defensive sectors like pharma, IT, and FMCG are likely to do better, while financials and autos, which majorly led the rally, might see a corrective move.