Volatility may cap Nifty at 22,500; trade cautiously

Where is headed?
While the weekly chart shows little change, reverting to the previous week’s close, the daily chart reveals a notable hesitancy at higher levels. Prices have precisely retreated from the upper boundary of the ‘Rising Channel’ pattern. Accompanied by a ‘Two Point Negative Divergence’ on the RSI smoothed indicator, a cautious approach is advisable for bulls at higher levels. The range of 22,700 to 22,800 presents significant resistance. Conversely, key indices hover slightly above their previous swing high, technically a support level. For Nifty, this lies within the range of 22,450 to 22,500, and a breach may trigger further profit booking, potentially towards 22,300 and beyond in the near term.

What should investors do?
IRCTC has broken out from the congestion zone and is trading at multi-year highs. We recommend buying for a target of Rs 1,160 with strict stop loss of Rs 998. SAIL has managed to confirm a breakout on weekly and monthly charts. We advise buying on a decline of around Rs 150 for a target of Rs 160 and then Rs 172. The stop loss needs to be placed at Rs 144. Hero MotoCorp has shown some signs of weakness as we saw prices attempting to slide below their recent key supports. Traders can look to short for immediate targets of Rs 4,350 and Rs 4,260. The strict stop loss is to be followed at Rs 4,525.

SUDEEP SHAH
HEAD-TECHNICAL & DERIVATIVE RESEARCH, SBICAP SECURITIES

Where is Nifty headed?
With the formation of a shooting star candlestick pattern on a weekly basis, we expect the indices to witness consolidation with a sideways to negative bias in the coming week. While the equity markets could witness resistance at higher levels on account of the rising dollar index and US 10-year bond yields coupled with crude prices sustaining at elevated levels due to persistent inflation and rising geopolitical tensions, we advise investors to prioritise large-caps and quality midcaps. Chart patterns suggest 22,200-22,250 will act as crucial support going and a possibility of consolidation between 22,200 and 22,750 zones looks more likely. However, if Nifty slips below 22,200, profit booking up to 21,980-21,860 may be seen.

What should investors do?
The coming week would be extremely crucial with heightened on account of sticky inflation and geopolitical concerns. Take hedged bets with appropriate position sizing. We expect large-cap names from select private and PSU banking, power, capital goods, chemicals, defence, and auto to outperform. Positive set-up is visible in select large-caps such as ICICI Bank, RIL, Mahindra, Eicher Motors, and Tata Motors. On the midcap front, Aarti Industries, ABB, HAL, Cummins, Exide, IRCTC and Tata Power could see strong buying interest.

RUCHIT JAIN
ANALYST, 5PAISA CAPITAL

Where is Nifty headed?
Along with the global markets, Nifty corrected towards the end of the week due to uncertain geopolitical tensions. However, FIIs formed long positions in index futures last week; their net ‘Long Short Ratio’ stands around 55%. The RSI on the Nifty daily chart is yet to cross negatively and the index has not yet breached its important supports. Hence, we read this down move as just a correction within an uptrend. 22,750 is seen as resistance as a 127% retracement of the recent correction coincides here with the rising trendline hurdle. Hence, Nifty needs to surpass this hurdle for a continuation of the uptrend. The immediate supports are placed around 22,470 and 22,380. Only if these are broken then the index could slide towards a 40-day exponential moving average of 22,200.

What should investors do?
Signs of profit booking are seen in pharma names where traders with existing longs can look to book profits. Jubilant FoodWorks has seen good price volume action, and hence, a pullback move could be seen here. Stocks such as Aarti Industries and City Union Bank have positive chart structure, one can keep a buy-on-dip approach here and look to buy on any dips in market volatility.