RIL is currently around 2800 and its life high is 2850, what are the chances that we are likely to see a fresh high on RIL in the coming week?
The chances are pretty high with the kind of trend we have witnessed in the last one or two weeks. I think it is more important to see the stock price movement devoid of what is happening across the indices as even on a day like Friday three-fourth of the session RIL was trading with a very strong positive bias and it was just in the last one hour when the market got into a sharp selling spree that there was some profit booking seen in the stock price.
at 2750-2800 levels looks to be quite promising and strong. We just hope that the stock does not break below its two-day or three-day low. So when a stock gets into an uptrend, we expect that the two day or the three day low to act as a support level. So assuming the RIL stock does not break the support level then we can expect the stock to come back towards lifetime highs as well.
Do you see risk reward moves favourable for an upside now for the index or there are chances that we will continue to see this range bound action?
After Friday’s price action it is expected that the market will go light into the next week. The trading activity for the next couple of days would be a bit dull than what we have seen in the last couple of days and that could probably indicate that we may get into a range for the indices. 16,800 could be the upper end of the range and possibly 16,400 could be the lower end.
Of course we have the RBI policy as well lined up next week so the markets would probably be on the edge over there. Looking at the last three weeks or four weeks of price recovery the Nifty has recovered almost 1000 points from those 15,750-15,800 mark so these are points where traders generally want to take the risk off, profit from the table and then probably look at lighting up the positions before the big event of the RBI policy.
If you had to pick one sector, IT versus bank, which one would it be? IT has already seen an up move of 5% this week while Nifty Bank has underperformed. Take a pick?
It is very difficult to say because the banking index is the strongest but then we are heading into a big event which can impact the Bank Nifty much more over the next week.
When you are into such a kind of market week where there is going to be a big event which can impact a particular sector or an index it is much more important to try and reduce your positions and ensure that you do not take too much of risk into that asset class.
So it is not just about the comparative part but it is more about trying to trim your risk especially when you know that you are heading into a big event which can have some serious repercussions into those sectors or the price movement for itself.
So I would not want to pick and choose either of the index but yes I think if Nifty IT index and especially the likes of
and start to get into a further recovery mode and if they break their Friday’s high then we can expect that the IT index can see a further bounce of at least three to five percentage points.
If you had to make a clear conviction bet in the market what would that be, an open cheque across all sectors, across all indices what is one thing which is very clear in the market?
Reliance outperforming is the clearest trade in the market so far and let us hope that that stock remains to be more of a stronger pillar in the market which is still fluctuating.
Post RIL do you feel Adani Group of stocks are also trying to jump in?
Not really. We are at a point where the markets are getting into a reshuffling of a portfolio mode, risk off mode. Traders are trying to trim the positions and I think at these times you have to ensure that you do not add on to too much of high risk or a high beta kind of sectors and stocks.
Adani Group of stocks have been doing extremely well over the last two to three years but the fact is that these stocks have not also gone through a sharp correction. I think the average correction for these stocks is just about 10% or 15% and when you look at the last two years of recovery stocks have given returns of 10x, 15x from their 2020 lows. So after rallying up significantly high if you see just a shallow correction you would not want to venture out into trading these stocks at least over the very near term. So I would avoid the space as of now completely.
Going forward what kind of stocks are on your radar because given the index level we could witness only range bound movement?
Now that index has rallied almost 1000 points on the Nifty I would probably keep 16400 as a pivot and till the time we are above that pivot range I would initiate buy calls.
I would like to suggest two buy calls. The first one is
as the stock did reasonably well and even last week closed almost at the highest point of the week, trading mildly below the 200-day moving average. So I would suggest a buy on ICICI Pru, targets to be kept at Rs 580 over the very near term and the stop loss to be kept at Rs 535.
The second one would be a buy on City Union Bank. At a time when the Bank Nifty is struggling to even hold a 50-day moving average,
has confirmed a close above its 200-day moving average. So that is a sign of strength as the stock has also recovered quite smartly almost 15% in the last one week. So I would suggest a buy on City Union Bank with a target of Rs 155 and the stop loss can be kept at Rs 138.
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