Rajesh Palvia on key market trends and trading ideas for the coming week

“We believe the Nifty may continue its upward movement towards 26,000, which is the next major call concentration area. At this point, one should place back the stop loss towards 25,550 to hold a long position. 26,000 is the immediate target, which can be achieved in the next two trading sessions,” says Rajesh Palvia, SVP Research (Head Technical & Derivatives) Axis Securities. Edited quotes:

ET Now: What do you think about this particular week that we’ve seen play out and what are you actually penciling in for the week ahead? Are you expecting a correction or consolidation? What do you see happening next?

Rajesh Palvia: Looking at the breakout on both the indices, it is clear that we have seen a strong short-covering action on Friday, and the way the global markets have behaved in the last few days, our market has also managed to breakout. A new all-time high. We believe this momentum may extend further. As we move into the closing week, sectoral rotation is evident, with underperforming sectors starting to participate. A major contributor to the rally came from the banking space, with the Bank Nifty gaining around 3.75% this week. We have already seen strong short-covering measures in private sector banks.

If there is a catch-up rally from PSU banks, it could provide further support to Bank Nifty, possibly extending its gains. We believe that the Nifty may continue its upward movement towards 26,000, which is the next major call concentration area. At this point, one should place back the stop loss towards 25,550 to hold a long position. 26,000 is the immediate target, which can be achieved in the next two trading sessions. For the Bank Nifty, this rally may extend further, as it is trading near 54,000. If it crosses 54,000, the likely target for the Bank Nifty in the next few days is 54,500 to 54,700, as large-cap private sector banks show a strong buying trend. Therefore, we believe that as long as Bank Nifty holds above 53,500, the trend is likely to remain bullish, and one should hold the position as bullishness may extend further.

ET Now: Given that distribution channels are changing and evolving, what are you actually penciling in when it comes to performance?

Rajesh Palvia: The FMCG sector has been an outperformer, with most stocks in the FMCG basket performing well in the last few days. Stocks such as Nestlé, Britannia and Dabur have performed well, even in a volatile market over the past few weeks, as buying interest shifted to FMCG stocks, leading to a breakout in near-term consolidation. We believe that the near-term structure of these stocks indicates further outperformance from the FMCG sector. Nestlé and Britannia are particularly attractive, with Nestlé potentially extending its gains to 2800-2850, and Britannia looking promising for a rally towards 6500. Other promising stocks in this basket include Colgate Palmolive and United Spirits. The FMCG sector should remain on the buy list for the coming week as momentum may extend further.

ET Now: What are you penciling in for ICICI Bank and the broader banking sector?

Rajesh Palvia: There may be upside in the private banking space. Most of the private banks have done well and the current week’s upward momentum in Bank Nifty and private banks may continue. ICICI Bank, which is currently at an all-time high, has shown a strong long build-up in derivatives data, signaling a move towards 1400 as we approach expiry. Kotak Bank also looks attractive after breaking out of its earlier swing highs with potential targets between 1950 and 1960. Overall, private sector largecap banks look promising, and we expect more upside as the Bank Nifty continues to rally.

ET Now: What are your top bets or trading ideas for the week ahead?

Rajesh Palvia: First, HDFC Bank looks promising, currently it is negotiating with its multiple supply zones around 1740-1745. If it crosses this level next week, we could see significant short-covering with a possible target of 1800. It is a buy with a stop loss at 1705. Second, Havells benefited from the consumption theme and is trading at all-time highs, it shows. Strong weekly long build-ups, suggest it could extend the gains to 2100. Buy with a stop loss at 2025. Finally, DLF looks promising from the real estate sector, emerging from a seven- to eight-week consolidation. We expect further outperformance with a possible target of 910; It is a buy with stop loss at 865.