investment strategies: Short covering rally can take Nifty towards 23,100: Analysts

Technical charts suggest a short-covering rally in Nifty this week amid a decline in the dollar index and crude oil prices, according to analysts. The index is likely to move towards 22,900–23,100 zone in the short term. Stocks such as Bank of Baroda, NTPC, Kotak Bank, HDFC Bank, SRF, ABB, Siemens, BPCL, Ceat, Cipla, Navin Fluorine, and Sun Pharma are expected to retain their positive momentum, analysts said.

JATIN GEDIA
TECHNICAL RESEARCH ANALYST, MIRAE ASSET SHAREKHAN

Where is the Nifty headed?
Nifty is all set for a short covering rally. The index on hourly-chart has formed a five-wave advance from the lows of 21,964 to the recent high of 22,677. Post the 700-point rally, the index has been consolidating and absorbing the selling pressure around the 50% Fibonacci retracement level (22,300). We expect the next set of fi ve wave advances to unfold during the week which could take Nifty towards 22,900– 23,100 zone. The outlook is bullish because the Nifty is not reacting adversely to the fall in the US markets and an unsystematic risk arising after a disclosure from a private bank in India. A fall in the dollar index, and continuous decline in crude price also auger well for emerging markets.

What should investors do?
Traders should actively look out for stocks showing relative outperformance over the last couple of weeks. Sectorally, CPSE, FMCG, metals, and pharma are looking positive from a short-term perspective. Bank of Baroda, NTPC, Ceat, Cipla, Coromandel International, EIH, MCX, MRPL, Navin Fluorine, Power Grid, and Sun Pharma are some of the stocks that have shown relative outperformance and are likely to witness continuation of positive momentum.

PRITESH MEHTA
EXECUTIVE VICE PRESIDENT – RESEARCH, YES SECURITIES

Where is the Nifty headed?
Nifty struggled for direction yet showed resilience amidst ongoing weakness in US indices. Immediate support is seen around the midpoint of the current three-digit Gann channel (i.e., 22,150). Indian indices have witnessed a seasonal pattern—March tends to be the most opportune time to buy. After last week’s pause, we expect resumption for a potential move towards 22,900.

What should investors do?
With broader markets like Nifty Midcaps and Smallcaps 100 indices showing relative and absolute weakness, sticking with large-cap names would be ideal. The ratio of the Financials Services index vs Nifty on the pointand-fi gure (P&F) chart is witnessing anchor columns follow through, implying strength in fi nancials. Financials Services index rallied 0.7% the previous week, outpacing other key indices. Within the space, Chola Fin and Bajaj Finance are forming multiple bullish patterns, expecting a rally of 10% in next few weeks. Signs of relative strength are also seen in NTPC, BPCL, and BEL JATIN GEDIA, against Nifty.

SACCHITANAND UTTEKAR
VP-TECHNICAL & DERIVATIVES, TRADEBULLS SECURITIES

Where is the Nifty headed?
While the broader market remains supportive, Nifty needs to establish a sustained close above 22,710 to confirm bullish momentum. Options data indicate a firm range between 22,200 and 22,700 for the week which could see an upward shift, implying a rally towards the major trend reversal confirmation breakout zone above 23,040– which would amplify buying signal and a sentiment shift.

What should investors do?
With infl ation cooling, both globally and locally, along with strong industrial growth and an upgraded GDP forecast, macroeconomic conditions favour a bullish market outlook. Investors should consider building aggressive long positions once Nifty sustains a close above 22,710–which would confi rm bullish momentum. Avoid a sell-on-rise strategy, as the market seems to be on the cusp of a turnaround. If a pullback occurs, it should be seen as a buying opportunity. Top picks for investors at this junction are Kotak Bank, HDFC Bank, SRF, ABB, Siemens, Indigo, Voltas, Varun Beverages, Escorts Hero Motocorp, Chambal Fertilisers, Home First Finance and Jio Financial Services.