ET Now: Clearly, we touched below the 200 DMA on an intraday basis. Not only nifty, smallcap also fell, although we have not given the closing but what does this mean? A free fall has occurred on that day. Many caps, 90% of largecaps fell that day. There is also no retail for protective packs like FMCG. Are DIIs also buying continuously, but FIIs selling continuously, what do you see on the technical front? Do you see the potential for a rebound next week? Do you find any critical support levels on both Bank Nifty and Nifty?
Nilesh Jain: After two consecutive sessions of decline, yesterday also we saw that Nifty managed to defend its 200-day moving average intra-day basis, we saw a decline below the same. But on closing, Nifty has given a good close and has formed a doji type candlestick formation. It seems that the dead cat is likely to bounce back next week and today may have been a better day compared to the previous four-five sessions as the broader markets outperformed Nifty Midcap and Smallcap, snapping their five-day losing streak and a small A bodied bullish candle has formed, so that basically suggests that we could see a relief rally across the board next week. And as far as Nifty is concerned, we expect a pullback towards 23,700, 23,800 levels. On the downside now we have high probability of Nifty testing 23,800 and 24,000 type levels till it closes below 23,500. On the other hand, Bank Nifty looks comparatively better. It is trading well above its 200-day moving average and we have seen an outperformance from the Bank Nifty today. We can see further phase of pullback which may take Bank Nifty towards 50,800 to 51,000, support is at 49,800, so it should be stop loss for long position and today if you look interestingly Volatility Index India Vicks has cooled down. 4% and it’s currently trading below 15, so 14.8 is very much a comfort zone for the bulls, so I think there’s a strong pullback next week.
ET Now: What we see is a complete list of stocks that can be added to F&O, 45 stocks that can be added by the end of this month, with the likes of Jio, Zomato, Paytm. How much change, how much inflow do you think, the kind of move we’ve seen today on Jio or for that matter other counters that could be potential for F&O entrants, how much inflow do you think these stocks are likely to see?
Nilesh Jain: Well, it’s very difficult to quantify that thing but overall it’s a more positive development that we can see going forward, so the names you just mentioned Jio, Zomato or D-Mart, so there might be some possibilities. can Selling pressure if we see any pullback, because of the F&O you get a good opportunity to short the stock so that could have a little bit of a negative impact, but I more or less see a positive move from a broader perspective and if we see inclusion of these stocks. So definitely the numbers will add up over the term, so that’s definitely positive from our long-term point of view.
ET Now: Next week, Nifty hovers around 200-dma, in fact this week’s fall has also stalled around that level, are we likely to maintain these levels, 200-dma next week as well?
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Nilesh Jain: Sure, so I think as I mentioned after the heavy fall that we’ve seen in the last couple of sessions, there needs to be a strong pullback. We can call it a tied dead cat, it is something we expect and there are multiple reasons for it. First on Nifty has already given a decent correction towards its 200-day moving average. The RSI if you see it has gone into the very oversold region of 30 and historically we have seen that whenever the rsi drops towards 30, we see a strong rebound, so that kind of rebound is something that we expect when you Looking at the India VIX. Which is highly improved and a comfort zone for bulls. So, overall given this type of setup, there should be a strong pullback and today was a very good day where we have seen an outperformance in the broader market. Many stocks have taken support near their respective 200-day exponential moving averages and are witnessing a reversal candle. Hence, going forward we expect a stock specific rebound as well as a strong pullback at the index level.
ET Now: But in that case what would be our recommended deals here for our viewers, two specific deals if you want to highlight?
Nilesh Jain: Sure, so I have two purchase recommendations. First of all if you see that most of the stocks have signaled a strong reversal today, so both stocks are trading well above their respective 200-day exponential moving averages. First of all, Grasim, after the last six consecutive sessions of correction, has formed bullish on the daily time frame chart today and given this type of setup we expect a strong follow-up move to continue and as far as the upside. As far as the target is concerned 2610 is the level we expect this stock to test and the recent swing low of 2490 should be the stop loss for long positions. Apart from that Piramal Enterprises, this stock is also trading well from its key moving averages and has also formed a triple bottom type formation near the 1000 level, so one can place a stop loss below 1010 and go long in Piramal Enterprises. can Pullback towards 1080 to 1100.
ET Now: We’ve seen the kind of earnings posted by the auto space, it’s in line set of numbers but fmcg was quite surprising and kind of a defensive pack as we call it and it took it to their four month low, FMCG. Do you think if a recovery is to play out, it will be in the pack that has seen the most declines, what are the areas to watch?
Nilesh Jain: Well, I think fmcg has one more leg to go on the bottom. Given the kind of setup we are seeing in the Nifty FMCG sector, I don’t see any immediate recovery in the FMCG space. It is currently at the 55,900 level and targets around 55,500 to 55,200 on the downside. So, overall defensive especially in FMCG we are not so bullish. I think the recovery should come through banking and financial. So, we want to highlight in financials, especially NBFC space, private sector bank, and private sector bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank to name a few. These are the few heavyweights where we are very bullish for a pullback. And within PSU banks, we believe SBI can accumulate to current levels. And in the NBFC space, counters like Chola Finance which have fallen the most and we expect a strong rebound there. Not only Chola Finance, apart from that Sriram Finance, these are some other names. We have also highlighted Piramal Enterprises. So, overall, we expect a strong rebound in financials overall. Cement pack, after such a drastic correction we liked the most. And apart from that the Nifty IT index if you see it is a few points away from touching a new record high. Hence, we also prefer Nifty IT stocks, especially largecap names like Infosys, TCS, HCL Tech and Tech Mahindra. So, these are a few stocks and sectors where we are very bullish and we expect these stocks and these sectors to lead the market if we see them in the next phase.
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