ETMarkets Smart Talk: Indiamart among 4 stocks with bullish chart setup: Rupak De

While the Nifty looked directionless on Friday, Rupak De, Senior Technical Analyst at LKP Securities, says the stocks of EIH, Indiamart, MHRIL, and L&T ended the week with a bullish chart set up. These 4 stocks would be on his radar for this week.

In this interview with ETMarkets, he also does the chart reading for some of the top gainers of the week and the outlook ahead. Edited excerpts:

After a flat last week, what does the trade setup look like for this week? What are the key levels to watch out for Nifty traders?
The benchmark Nifty remained volatile before ending near its previous week’s close. On the weekly timeframe, the Nifty ended below the falling trendline. On the daily chart, the index is sitting comfortably above the important 50 exponential moving average indicating a positive trend. Therefore, the trend looks positive but the strength is likely to come above 17,700 (trend-line breakout point). A decisive breakout above 17,700 may induce a decent rally towards 18,300; again above 18,300 the index may move towards 19,100.

Nifty Bank has been a relative outperformer despite the volatility. How should traders approach the index?
Nifty Bank has been outperforming Nifty for the last several weeks. The weekly chart shows a falling channel breakout, and the index has so far maintained its strength. Besides, the index has moved up after a brief consolidation, suggesting a possibility of an extended rally over the short to medium term. The index will remain buy-on dips as long as it holds above 37,700. Below 37,700, the index may witness a serious correction. However, a decisive move above 39,500 may induce a rally towards 41,800.

What's driving the rally in PSU banks? Do you see them in the overbought zone now?
Nifty PSU Bank index has moved above its previous swing high on the back of a consolidation breakout on the weekly chart. The index has been sustaining above important moving averages on the weekly timeframe. Even after a decent rally, PSU banks look poised to witness further rally as weekly RSI is far from overbought.

The rally in Tata Teleservices (Maharashtra) has been spectacular and is in fact the top performer in the BSE500 pack with over 43 per cent rally in 5 days. What does the chart say?
The stock has given a downwards consolidation breakout on the weekly chart registering a bullish reversal. On the higher end, Rs 141 may act as a crucial resistance. The further rally may require a decisive move above Rs 142. Whereas on the lower end, support is there at Rs 124.

Which are the 3-4 stocks that would be on your radar for this week?
Last week, some stocks showed very interesting movements. The prices of EIH, Indiamart, MHRIL, and L&T ended the week with a bullish chart set up. Therefore, I will keep these stocks on my radar this week.

Besides Tata Tele, a handful of other telecom stocks like Tejas, HFCL and Tata Communications also rallied in the week. What's cooking in this pocket?
A lot of stocks in the space have been showing activities. Stocks like Tejas Network witnessed a spectacular rally on the back of development related to 5G. The stock price of Tejas Network has given a breakout from an eleven month's long consolidation suggesting a strong medium-term uptrend.

Is it better to stay away from IT stocks at this stage?
The Nifty IT has been falling with a lower top lower bottom formation on the weekly chart resembling a structural bearish sector. The index has given a consolidation breakdown which may set it for a further correction towards 22,000. However, a decisive move above 30,500 may change the sentiment to bullish for the IT space.

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