Nifty Bank: More pain awaits market next week, Nifty Bank will be main draw: Sharekhan’s Ratnaparkhi
A number of technical indicators indicate that the pain is not over yet, says Gaurav Ratnaparkhi – Head of Technical Research at Sharekhan by BNP Paribas.
Multiple technical indicators are indicating that the index is likely to remain under pressure in the coming week. For Nifty, 17,400-17,500 is a critical resistance area,” Ratnabarkhi told ETMarkets.com.
“Unless this barrier to the upside is removed, Nifty is expected to retest last week’s low at 16,824; below which 16,600 would be the next target.”
In the week that has passed, Nifty50 slipped 1.7 percent to 17,171.95. Amid heavy selling pressure in the first two trading days of the previous week, the index fell below the 17,000 mark, hitting a low of 16,824.70 on April 19.
Ratnabarkhi warns that Nifty Bank, which has struggled hard so far this month, is expected to be one of the main factors influencing the benchmark next week as well.
“Going forward, Nifty Bank is expected to break last week’s low at 35926 and could decline towards the daily lower Bollinger Bands, which is approaching 35000. On the other hand, 36800-37000 will act as a cap for the short term.”
He believes that the banking sector is likely to continue in the “correction” phase. The Nifty Bank index fell last week by 4 percent.
The technical analyst is bullish on the outlook for the energy sector, which has shown an upward trajectory over the past few weeks.
This trend is evidenced by the Nifty Energy index, which has seen gains in tandem with the expansion of the daily and weekly upper Bollinger bands. The index added 2.5 percent last week.
“We expect this sector to remain on the upward trajectory,” says Ratnaparkhi.
According to him, the IT sector, which over the past 2-3 weeks has succumbed to a massive bout of selling pressure, may see a recovery.
“This sharp drop has pushed the daily momentum indicators into oversold areas, which are now ready to recover. So a rebound in the IT space is a must.”
Going forward, the automotive and infrastructure sectors are on Ratnaparkhi’s radar. The technical analyst said after a short pause in the penultimate week, these sectors “beginning” of a new rally.
His optimism about these sectors stems from the fact that short- and medium-term structures show inherent strength.
“So we expect better performance from this space in the next couple of months.”
He cautioned, however, that there are risks in the broader markets, particularly in the small cap space.
“…market participants should be very careful about their exposure to small stocks,” he said.
So far in the month, the BSE small-equity index has added 4 per cent while the major BSE Sensex index is down 2 per cent.
Ratnaparkhi recommends to buy
which sets a target price of Rs 8,300-8510 and a stop loss of Rs 7,600.
“The stock has exited a short-term consolidation process. It has moved out of a side channel and the next one started up. The daily momentum indicator triggered a bullish crossover and started a new cycle on the upper side of the balance line.”
Analyst advice is to sell May futures to Piramal Enterprises. His target in the stock is Rs 2,080-2,000, with a stop loss of Rs 2,280.
“The stock recently faltered near its crucial weekly moving averages as it formed an inside bar pattern on the daily and weekly charts and entered a correction mode…the daily momentum indicator has coincided lower.”
He also recommends selling May Futures of
. His target for the stock is Rs 110 to Rs 104 with a stop loss of Rs 121.
(Disclaimer: Recommendations, suggestions, views and opinions provided by experts are their own. These do not represent the views of the Economic Times)