markets: Nifty looks strong with support at 23,400: Analysts

Most technical charts indicate a bullish trend ahead, but a decisive breakout above 23,800 is needed for the Nifty to trigger a pullback rally towards 24,200, and then 24,500 in the short term, according to technical analysts. On the downside, the 23,400 zone remains a key support.

Stocks with a bullish setup include Bharti Airtel, Chambal Fertilisers, Divi’s Lab, Glenmark Pharma, Hindalco, IndusInd Bank, FIEM Industries, SJS Enterprises, UltraTech Cement, Navin Fluorine, and Blue Star, which are expected to outperform, analysts said.

CHANDAN TAPARIA
HEAD – TECHNICAL & DERIVATIVES, MOTILAL OSWAL FINANCIAL SERVICES

Where is the Nifty headed?
On the weekly chart, a bullish candle formation has emerged, while on the monthly scale a Doji-like candle with a long lower shadow indicates buying interest at support levels after a period of profi t booking over the past four months. Index has formed a bullish divergence on the daily scale as prices made lower lows at 23,047 and 22,786 while RSI formed higher lows, which gave a short-term bottom-out approach with a sign of reversal. Index has been consolidating between 23,400 and 23,800 zones from the last four trading sessions with a hurdle near the 50-day exponential moving average, and now requires a hold of 23,333 zones with follow-up action to commence the next leg of rally towards 24,120 levels.

What should investors do?
The broader market may experience range-bound trading. Sector-wise positive on metal, auto, and pharma; while FMCG and energy are likely to see capped upside with stock-specifi c action. Bullish setups in Bharti Airtel, Chambal Fertilisers, Divi’s Lab, Glenmark Pharma, Hindalco, IndusInd Bank, JK Cement, JSW Steel, Kotak Bank, Lauras Labs, Lupin, Maruti, MGL, Tata Steel and UltraTech; while weakness is seen in Bharat Forge, Bosch, Colgate Palmolive and Page Industries.

ARPAN SHAH
SENIOR RESEARCH ANALYST, MONARCH NETWORTH CAPITA

Where is the Nifty headed?
The benchmark index traded volatile and closed with a bullish candlestick formation on the weekly chart. Nifty has a minor hurdle at 23,800, and a breakout above this level will trigger a short covering rally in the market towards the 24,250 level. The banking index has outperformed the benchmark index in the last two weeks and will continue this outperformance in the coming week. A breakout above 50,500 will trigger a rally towards 51,800.

What should investors do?
Private banks, like IndusInd and ICICI, are likely to outperform. The Nifty Metal index is likely to provide a strong upside in the coming days. Vedanta, Hindalco, and JSW Steel are the top picks. The auto sector could be a big beneficiary of government’s consumption push and recent RBI rate cut. M&M and Eicher Motors are strongest in the pack, and both can be added on dips. Auto ancillary FIEM Industries and SJS should be added at the current levels. In realty, Lodha and DLF can witness a short covering rally towards the expiry. Kalyan Jewellers, Trent, Solar Industries, and Tata Motors are trading with negative bias and any rally is a shortselling opportunity.

SUDEEP SHAH
HEAD – TECHNICAL & DERIVATIVE RESEARCH DESK, SBI SECURITIES

Where is the Nifty headed?
A decisive breakout above 23,850 could open the gates for a pullback rally towards 24,200, followed by 24,500 in the short term. However, failure to surpass this level may lead to consolidation or a minor dip. A breach below 23,400 could drag the index towards the next crucial support at 23,050–23,000. We feel having a stock-specifi c approach is the only way one would be able to navigate the current market volatility.

What should investors do?
The current consolidation phase presents a strong opportunity for long-term investors to accumulate quality stocks at attractive prices. We recommend traders focus on auto, pharma, and fi nancials, which we expect to show relative resilience. Largecaps like Bajaj Fin, M&M, Divis, Infosys, Bharti Airtel, UltraTech, and Eicher Motors can be considered on dips; while select midcap stocks such as Navin Fluorine, Bluestar and KFin Tech are expected to outperform.