Nifty has been hitting record highs for three consecutive sessions, Nifty Bank is above 50,000, midcaps, smallcaps are also hitting record highs, your sectors are also hitting record highs. Still, Nifty is trading in a slightly narrow range. So, what is your take on the anomaly we are seeing in the market and what is the outlook for next week?
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Nifty did manage to limit gains to less than 1% week on week but the way the market behaved during the week saw very strong buying across multiple sectors. So, this clearly leads us to believe that there is a lot of confidence on the street and retailers and participants are buying aggressively in the market.
Sectors which we were seeing underperformance in the last few years like paper, fertilizer, even sugar and other sectors are now participating in this rally. So, looking at the broader market, we are maintaining our bullish outlook, the kind of buying action we are seeing across sectors clearly suggests that this rally can continue further and potential targets for Nifty we can look at 23,700 to 23,800 in continuation of this uptrend. So, buying on dips should be your strategy based on derivative data, key put writers are placed at 23,300, 23,100 strikes.
Hence, these areas can act as key support areas if there is any minor correction in the market. Hence, you should place a stop loss at 23,200 to keep long positions at higher levels. 23,700 can be a possible target on a near term basis.
On Bank Nifty, still Bank Nifty is struggling to give a decisive breakout above 50,000 mark, so based on call concentration it is a challenging level at the moment.
So, I think if Bank Nifty starts a new week above 50,000, 50,100 points, there will be short covering action and then a potential rally for Bank Nifty could extend towards 50,500 to 50,600. Although most banking stocks have shown some buying interest this week, I think next week we could see a rally in banking stocks and Bank Nifty could also start contributing to this upward momentum. At this point in time, yes, we have a bullish outlook for Bank Nifty. Your stop loss should be placed at 49,600 for holding long positions.
FIIs have reduced short positions significantly, from 3.4 lakh contracts, their short position has now come down to just 34,000. What does this indicate? Are we at higher levels? FIIs may turn big buyers as at least their selling has stopped. The buying volume is not that significant, but at least the selling has stopped.
If we look at the data of the last five-six months, we will find that FIIs were absent in the market and this rally is being led by domestic participants. So, I think they have reduced their short positions. So, it is again showing that there is pain in their short positions, that is why they are reducing their short positions and I think if FIIs are not taking short positions at this time, then retailers are participating in this market and they are quite excited about the market.
So I think at the moment domestic flows are driving this market and the way we are seeing incremental growth in SIP flows and other avenues, so I think this is likely to continue going forward and we believe this trajectory may continue even higher going forward although FIIs are not buying in the market at the moment as well, so I think domestic flows may drive the rally because most of the domestic themes are driving this market. So this clearly shows that everyone is optimistic about the growth trajectory of the Indian economy and that is why this is a sign of continuation of this bullish market.
What will be your recommendations for the week ahead?
The first stock from the pharma sector, Cipla is on our radar. The stock is now at its all-time high. The way the stock managed to break out of the last three weeks of consolidation clearly shows that the upward trend is continuing.
We believe Cipla can go further up till 1620. This stock can be bought with a stop loss of 1530. The second stock is JSW Energy. The stock managed to break out of its multiple supply zone on the daily chart.
The stock is enjoying almost its all-time high trajectory. Hence, JSW is in a bullish trend. The technical structure at both weekly and daily levels is indicating that this momentum may continue going ahead. We are forecasting an upside target towards 710. Keep your stop loss around 668.
And the third stock, which is Triveni Engineering. Most of the sugar stocks have done well and Triveni Engineering, again looks very promising. The way the stock managed to break out of almost seven-eight weeks of consolidation clearly suggests that we may see follow-up buying action here in the coming week. Potential target we can look at is 425. Buy Triveni Engineering with a stop loss of 388.
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