Amid February derivatives expiry this week and with most of the shorts already being covered, there seems to be too little fuel in the engine to drive past 12,300, a significant resistance for now, Anand James, Chief Market Strategist at Geojit Financial Services, said in an interview with Moneycontrol’s Kshitij Anand.
Q. The Nifty50 saw a smart rally in the week gone by, which pushed the index back above 12,100 levels in a single trading session. What is your outlook on markets for the coming week?
A. Though China has seen a decline in new deaths, there has been a rise in cases reported from elsewhere, like Japan and South Korea.
But, equity markets in the Asia Pacific apart from Indonesia, Thailand, and Malaysia have recovered very much from the early February lows, suggesting that the event pricing has already happened and that there needs to be a dramatic escalation for re-rating.
In India’s case, with February derivatives expiry coming up, and with most of the shorts already being covered, there seems to be too little fuel in the engine to drive past 12300, a significant resistance for now. Traders may wait for the new series for the next leg of upsides aiming 12,850.
Q. India Gold April futures hit a fresh record high in the week gone by. What are your targets for the yellow metal for 2020? And, what should new investors do now — wait for a dip or can opt for buying at current levels?
A. History tells us that geopolitical events have a brief, even if massive, impact on gold unless its influence on the US Dollar is strong.
Dollar, world’s premier currency of exchange that gold is shadowing has been going from strength to strength and is now at the highest in almost three years against a basket of the world’s major currencies.
This is likely to dim the appeal of gold as an alternative currency. Rupee meanwhile has weakened past a month-long consolidation band and should give gold some more traction in Indian prices, but it may have run up too far and too quickly to be attractive any longer for wedding buyers in India.
To this end, we may be nearing an exhaustion point in Indian gold. Hence, from a portfolio perspective, it does not make sense to add gold at this moment.
Q. Top 3-5 stocks which are good breakout buys at current levels and why
A. Here is a list of top three stocks which are looking good breakout buys:
Delta Corp: Buy | LTP: Rs 156.3 | Stop Loss: Rs 144 | Target: Rs 174
The proximity of 2019’s low has given the courage for bargain hunters to look for a bounce back from the 35 percent fall that had unfolded in just three months.
This attempt has formed a hammer candlestick pattern in weekly charts as well, supporting the buy view for a ~10 percent up move.
India Cements: Buy | LTP: Rs 75.55 | Stop Loss: Rs 69 | Target: Rs 87.4
The present upswing follows a successful morning star pattern formation. A narrowing Bollinger band raises the potential for price expansion, and as the price has bounced off after penetration of lower Bollinger band, an up move aiming 87.4, the upper band of the weekly Bollinger band can be played.
Century Plyboards: Buy | LTP: Rs 154.3 | Stop Loss: Rs 148 | Target: Rs 162
The last couple of days’ buying effort has brought a pause to the fortnight-long fall. With such pause having occurred at 38.2 retracement level, the ensuing bullish engulfing pattern suggests that the up move is worth playing.
A larger breakout (@180) pattern may also be in the formation, but since this could first stymie the ongoing up move, only a modest target of 162 should be attempted initially.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
