A cautionary stance is necessary at current level as the index is trading near key resistance levels, but as long as Nifty trades above key support levels, traders should avoid taking contra bets at current level and ride the momentum on the upside.
A historic day for Indian equity markets as Sensex rose above 36,000 for the first time while Nifty climbed Mount 11K on Tuesday. The relentless rally seen in Indian equity markets has surprised many technical analysts’ on D-Street which are now hinting at caution at least in the near-term.
A cautionary stance is necessary at current level as the index is trading near key resistance levels, but is it the time to go short? Well, as long as Nifty trades above key support levels, traders should avoid taking contra bets at current level and ride the momentum on the upside.
A large part of the euphoria could be attributed to pre-budget rally as investors are factoring a big bang growth focused Budget from the Modi government.
It will be futile to go short in this market at current level and investors should wait for a confirmation, that’s the word of advice coming from technical pundits who are tracking markets on a daily basis.
The Nifty registered breakouts across the time frames which is suggesting that the bull is still young and getting strengthened further with broad-based participation as laggards like IT have also become active and making new lifetime highs,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
“Metals have a long way to go which may help indices in maintain higher levels. Hence, post-budget if market sustains above the critical supports of 10300 (on monthly closing basis) one can expect the momentum to remain intact and in that scenario, we will not be surprised to see indices trading close to 13,000 levels between December 2018 to March 2019,” he said.
Considering the factors we have seen strong rally so far in the year 2018, mild profit booking decline is possible to post Budget but that would also be short-lived and investors who are looking to enter markets should have cash ready to be deployed.
“Riding the Bull Run, corrections are short lived. Profit booking would hit investors the most who are overleverages and have to clear the balances. For long-term investors, buy on dips is the right strategy,” Ritesh Ashar – Chief Strategy Officer (CSO) at KIFS Trade Capital told Moneycontrol.
“The current rally is largely on the back of strong Q3 earning and expectations from upcoming Budget. Investors can remain invested in quality stocks and quality management,” he said.
So where is the index headed?
Sameet Chavan, Chief Analyst, Technicals & Derivatives at Angel Broking
Ideally, when a particular move is in its early days, it is very easy to project targets. But, the kind of move we have witnessed in last 13 months, it becomes slightly tricky to give any particular figure as a target especially after 30% rise in such a short span.
Technically speaking, for the current year, the next projected level is around 11,700 and then possibility of 12,000 cannot be ruled out.
Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan
The Nifty50 can reach 11,300 over the next few sessions. Various technical parameters suggest that the trend is far from over, though there is the possibility of a pause for a breather.
Among sectors, IT & private banks have led the rally in its recent leg & now Metals look set to carry the baton forward.
Ritesh Ashar – Chief Strategy Officer (CSO) at KIFS Trade Capital
We see Nifty at 12,000 levels by December-2018. The last rally was led by small and midcap but this time it could be largecaps which will contribute to the new highs in the market.
We have already witnessed the participation of largecaps in January 2018 which is likely to continue. The foreign institutional investors (FIIs) are also back in action, ad in the month of January till date, they have poured over Rs 5,000 crore.
Pushkaraj Sham Kanitkar, AVP - Technical Research at GEPL Capital
We see Nifty50 rallying towards 12,500 by December-end. Profit booking could be on cards post Budget which should be used to buy in to quality stocks. Investors should avoid going long at current levels and wait for dips rather than chasing stocks at high valuations.
Hemang Jani, Head - Advisory, Sharekhan
The last leg of the Nifty move was swift (from 10,000 to 11,000). It just took 50 days to move past this key milestone. As we have a derivative expiry on Thursday, we could see short covering and then a bit of a cool off.
It is heartening to see index getting support from quality large caps e.g. Infosys, HDFC, HDFC Bank, HUL, and Reliance Industries. We continue to be positive on the markets and investors should look out for buying into quality banks (HDFC Bank, IndusInd), NBFCs like Bajaj Finance and Consumer names like HUL and Marico.
MORE WILL UPDATE SOON!!
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