Navigating Bull Run: Rajesh Palvia’s Insights on Bank Nifty and Sectoral Moves

ET Now: I specifically want to talk about Bank Nifty because, even on days when Nifty was bullish, you have seen Bank Nifty come under some pressure. This quarter is on the back of an update that came out recently. Federal has done very well, while HDFC Bank, on the other hand, has disappointed. PSU banks are riding high on their cash deposit ratios. So, let us know what levels you are eyeing for Nifty Bank moving forward, and also let us know what we can expect when these numbers finally come in the quarter. How would you like to play in this field? Will it be privates versus PSUs, or will you be stock-selective in both sectors?

Rajesh Palvia:

Bank Nifty was muted for the week, ending around 52,500. However, looking at the data setup, 52,000 has attracted more put writing, so it is likely to act as a good support area during the decline. Therefore, 52,000 will be an immediate and important support area on the downside. On the high side, 53,000 will act as a supply zone, with the main call concentration placed around that strike. I think if it crosses 53,000, we may attract short-covering action in the market and see higher levels.

The overall framework for Bank Nifty is still bullish. The main reason was HDFC Bank. While most private sector banks have fared well in the past two days, stocks like ICICI Bank, Kotak Bank and Axis Bank have also participated in the rally. Some people like the Federal Bank have also contributed to this upward move. Most private banks are still holding their ground at high levels. Today’s session has seen some cooling off the highs, but we believe, barring HDFC Bank, most of the private sector banks are holding their ground.

We believe the uptrend will resume going forward. Some PSU banks have also shown good accrual activity. From that vantage point, I think SBI and PNB look promising at the moment, and I think we may see buying interest going forward. Among private banks, we like ICICI Bank and Kotak Bank. Among the PSU banks, SBI and PNB can be looked at for long deals. We believe Bank Nifty will rise, so 52,000 should be your stop loss to hold your long position in Bank Nifty.

ET Now: I want to come back to you. While Mr. Bagga is a bit cautious about both sectors, I would like to understand your view on the market going forward. Given the bullish run we have seen, remember that a month ago we saw the Nifty fall 8% on the back of the election results. From there, we see where we are today, at 80,000 on the Sensex. Do you think this kind of bull run is sustainable? Are you penciling in a time correction for the markets? If so, how much do you see the indicators improving?

Rajesh Palvia:

Generally, what is happening in the market is driven by two factors. There is a sentiment, which is extremely bullish. The second is fluidity flow, in which there is continuous flow at the local front. There is no discontinuity on the flow side. These two main factors are driving the market at the moment.

Despite the sharp run in the last two weeks, the broader market, midcap and smallcap space are attracting buying interest. Expectations regarding the budget and long-term reforms are driving the continuous buying flow in the market. We believe that as long as 24,000 is intact on Nifty, there will be no cautious trend at the moment.

The trend is likely to remain bullish. Therefore, 24,000 should be an important support area on the technical front for Nifty. A buy-on-dip strategy should be followed until we break those levels. The global market is also supporting this trend. Across the board, we are seeing good traction in terms of buying, and this rally could continue. At the moment there are no signs indicating a near-term reversal.

ET Now: With earnings season set to begin soon, the IT pack has been on the rise since last week. This is the seventh day in a row that IT stocks have seen gains. What are the expectations building? Many brokerages note that they are optimistic about upcoming IT earnings. What do you see on the chart right now? Are you recommending a business in the IT space before the earnings start?

Rajesh Palvia:

Yes, some IT stocks are looking very promising. The IT space gained in the current week, with most IT indices up by 4-4.5%. Stocks like Infosys and TCS from the largecap space hold their positions higher and we may see more upside in Infosys. 1680 to 1700 would be the next target for Infosys, as the stock is holding comfortably above 1600. The last few days have seen a long build-up. We believe Infosys may be a stock to focus on.

Some midcap IT stocks are also looking promising. Emphasis from the midcap IT space is looking very strong with Coforge. Mphasis managed to break out of the three-month consolidation range, allowing the upward move to continue. 2750 to 2800 could be the next target with a stop loss around 2580. Coforge is also looking bullish with a breakout and prolonged build-up in derivatives. Target for Coforge could be 6000 with stop loss around 5790.

ET Now: Do you have any more recommendations to share with our viewers for the week?

Rajesh Palvia:

Yes, the first stock is Reliance Industries. The way Reliance Industries is moving forward, we believe it has potential to grow. The stock has managed to pull out of the last four days with marginal declines. The next target for Reliance Industries will be 3260, with a stop loss at 3150.

Another stock is from the pharma space, Aurobindo Pharma. The stock showed a bullish candle in the current week, reversing a three-week decline. We believe bullishness can continue with a target of 1340 and a stop loss of 1265. The third stock is from the power sector, CESC. It is a midcap stock trading near its all-time high, with strong buying action throughout the week. 185 may be the target for CESC with a stop loss around 162.