Volatility ahead, but the trend is positive: Analysts

Though the overall trend remains positive, the market may see some volatility with monthly expiry during the week. Investors can buy the dips as long as 17,900 is sustained on a closing basis, say technical analysts.

VIRAJ VYAS
TECHNICAL & DERIVATIVES ANALYST, ASHIKA STOCK BROKING

Where is the Nifty headed?
The Nifty saw a tight range consolidation. Levels of 18,400- 18,300 are where the index faces resistance, and only a sustained follow-through above the same is likely to drive the index higher toward all-time highs. DII short positions in index futures at a 3-year high is a concern, while the India VIX is near the lowest level this year which might point towards a complacent market.

What should investors do?
The overall trend remains positive barring a few minor corrective moves, and investors should ‘buy the dips’ as long as 17,900 is sustained on a closing basis. Strength should continue in HAL, Bharat Dynamics, Canara Bank, SBI, L&T Technologies, TCS, Britannia, and Varun Beverages. JSW Steel and Tata Steel are looking to break out.

ASHISH CHATURMOHTA
HEAD OF EQUITY ADVISORY RESEARCH, JM FINANCIAL SERVICES

Where is the Nifty headed?
The rally in Nifty from its September lows has been led by a select few large-caps and lacks broader participation which is a cause of concern. Hence, mid and small stocks must start participating in rallies to sustain and advance. This will provide a breather to large-caps to consolidate for the next leg of the rally. Nifty has a good support around 18,100. From here, it can rally back towards 18,600 levels.

What should investors do?
With monthly expiry this week and global cues driving the market, it could see some volatility. Stocks from the capital goods sector like L&T, Cummins and ABB are poised for further up-move and can be looked at. In defence theme, HAL and BDL continue to show strength. Persistent and LTTS have formed a good base at lower levels in the mid-cap IT space. Cement seems to have bottomed out and traded at breakout levels; UltraTech and Dalmia Bharat look good.

SRIRAM VELAYUDHAN
VP-ALTERNATIVE RESEARCH, IIFL SECURITIES

Where is the Nifty headed?
Nifty is facing resistance around 18,400. However, consistent buying is emerging at lower levels. Consolidation/profit booking phases allow overbought momentum oscillators to cool off, which is a healthy sign. Hence, we expect Nifty to move towards 18,600 levels in the ensuing sessions.

What should investors do?
Traders with risk appetite can buy Nifty futures near 18,300 levels for a target of 18,600 and place a stop loss at 18,150. We believe financials, metals and cement will outperform on the sectoral front; while FMCG and pharma may underperform the market in the coming days as a beta trade. Irrespective of market volatility, investors can build positions in select names like HDFC twins, ICICI Bank, Axis Bank, L&T, Tata Motors, and Hindalco from a medium-term investment horizon. As we expect banks to continue outperformance, investors can explore the option of buying PSU and Nifty Bank ETFs.