“Unless and until we decisively breach 23,700, we feel this is bear market buying and Nifty should eventually move towards 24,800 mark, where there is major resistance for the index,” Sharma told ET Now.
The 24,800 level is the line in the sand and the index must clear to confirm the broader recovery thesis. Getting there, argues Sharma, is a matter of if or when the geopolitical situation deteriorates rapidly from here.
Its assurance depends on how the market behaves under pressure. Some profit booking was inevitable after a seven-eight session bull run. But, for Sharma, Monday’s gap-down was open and what followed. “Looking at the way we handled Monday’s gap and the way we’ve seen buying on the dip, it looks like the current dip should also be bought somewhere around the 24,100 mark,” he said.
Leadership is emerging and that is important
What gives Sharma more confidence is the intrinsic quality of the rally. Market breadth and sector rotation are giving constructive signals. “Market leadership is emerging. We are seeing public sector enterprises doing very well. We are seeing metals stand out in this type of market, and we are also seeing support from the IT pack,” he said.
The PSU Enterprise, Metals and IT forming a three-pillar support structure is not a fragile setup. It suggests that the market is not being carried by a momentum trade, which is important when assessing whether there is institutional conviction behind deep-buying.
PSU Banks: The Next Leg
On Bank Nifty, Sharma’s reading is nuanced. Banks led the first phase of the rally but have since taken a back seat. That, he argues, is about to change, especially in the PSU banking segment.
“PSU banks are looking very strong at these levels and we may see a round of buying in the PSU banking pack in the next few trading sessions,” he said.
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His most infamous name: Punjab National Bank. The risk-reward on PNB, says Sharma, is technically compelling. He recommends buying the stock at current levels with a stop loss of Rs 111 at Rs. Sees going to 120-124.
(Disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. These do not represent the views of Economic Times.)
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