A close above 18,350 could take the Nifty50 towards 21,000 in long term: Mehul Kothari

"A move above 18,350 on a closing basis, would confirm a major range breakout and that breakout has a theoretical target of around 21000," says Mehul Kothari – AVP – Technical Research, Anand Rathi Shares & Stock Brokers.

In an interview with ETMarkets, Kothari said: “On the downside, 17,900 would be an intermediate support and a breach of the same might apply some brakes to the ongoing momentum” Edited excerpts:

What a week for Indian markets. Bulls managed to retain control despite some volatility due to Fed and RBI action? Is anything particular which stood out?
Outperformance has become a new norm for the Indian markets for quite some time. The domestic markets yet again remained upbeat during the week on the back of positive FII inflows in the cash market along with their longs in index futures.

At the same time, our own domestic strength has been surging post 2020 and that has been bolstering the sentiments.

During the week, the Nifty surged around 2% to close above the 18100 mark whereas the Nifty Bank index is still unable to surpass the recent high.

Where do you see Nifty or Nifty Bank headed in the coming week? Any particular levels that one can watch out for?
At this point in time, we are at a very crucial level. The move from here on might dictate a trend for coming months. It is for the fifth time in the year 2022 that the Nifty50 is hovering near 18,100 mark.

Above 18,100, the index is another resistance is placed at 18,350. A move above 18,350 on a closing basis, would confirm a major range breakout and that breakout has a theoretical target of around 21000.

However, due to too many uncertainties in the global space, we don’t expect the move to be one-sided. This is a broader picture but for the short term, we remain cautious till the time 18350 is not taken out.

Even the derivative stats indicate that FIIs are now decently long in index futures (Long Short ratio is around 65%) and this opens up the possibility of their unwinding in longs.

Thus, on the downside, 17900 would be intermediate support and a breach of the same might apply some brakes to the ongoing momentum.

Ideally, we have a bullish opinion on the markets, but one considerable corrective move is quite possibly looking at the global uncertainties. Thus, traders are advised to stay vigilant and follow strict stop losses.

With regards to the Nifty Bank index, since the past few sessions, we have been witnessing some kind of underperformance by the banking index and that is a sign of discomfort.

Going ahead, a fresh bullish trend would emerge only above the 42000 mark. On the downside; 40800 could be an important trigger point. A breach of the same might bring in fresh pessimism which can drag the index towards 39000.

In terms of price action, we will close higher on a week-on-week basis. Any important triggers that investors should watch out for in the coming week?
Traders should keep a tap on the above-mentioned levels for Nifty and Bank Nifty. That might be able to provide clear outlook.

However, with regards to any triggers then they remain the same like the geopolitical issues and the inflation worry across US and Europe.

In terms of sectors, oil & gas as well as healthcare saw some strong buying – what is fuelling momentum in these sectors?
I don't think oil and gas ran up a lot this week as it was higher by just about 1.5%, which is mainly due to reliance.

The outperformers have been the metals, which rallied around 7% during the week on news of China reopening. As far as healthcare is concerned, some support came due to better results by a few individual companies.

Any short-term trading ideas for the next 3-4 weeks?
Here are top trading ideas -

IEX: Buy near Rs 141| Target Rs 156| Stop Loss Rs 132| Upside 10%

The stock is trading in an oversold. The weekly RSI is turning from historical support. Also, the stock found support at the placement of the falling trend line.

As per the derivatives data, we are witnessing some unwinding in the 140 strike CE option and that seems to be short covering. Thus, we advise traders to buy it in the range 142 - 139 with a strict stop of 132.

Piramal Enterprises: Buy near Rs 875| LTP Rs 886| Target Rs 1050 | Stop Loss Rs 785| Upside 18% (3 - 4months)

The stock has corrected around 50% from the peak of 1651 (adjusted price). At this juncture, it is hovering at the 61.8% retracement of the previous rally, and we are witnessing a hammer formation on the monthly chart.

This hammer formation indicates a reversal and excellent risk reward to go long. Thus, we advise traders to buy it in the range of 880 - 870 with a strict stop of 785.

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