The Nifty50 looks bullish over the short term but, Ashish Kyal, CMT, founder and CEO of Waves Strategy Advisors, anticipates some profit-booking after Diwali and the index may move on the downside in an Elliott wave pattern.
In an interview with Moneycontrol, Kyal says that there could be some rangebound move within 19,100 to 19,700 on the Nifty, while buying may return in December.
On the broader markets front, the chartered market technician with vast experience in the capital markets expects the rally in Nifty Midcap 100 and Smallcap 100 to continue in the coming months. "Both the indices are currently in a bullish trend and the technical indicators are pointing to further upside," he says. Excerpts from the interview:
Does Suzlon Energy look overbought at the current levels, or do you see it reach Rs 50 in the coming weeks?
We have been witnessing classic rally in Suzlon Energy since June 2023. In this entire rally every minor dip has acted as a classic opportunity to enter into the trend and the same can be used in coming trading sessions to go long in this stock.
As RSI (relative strength index) is near the overbought territory on the daily chart, currently we can expect a dip towards the base line of the Ichimoku Cloud which comes near 33 levels for a move to Rs 45.
For the Nifty50, 19,300 seems to be a critical support in the near term. Do you think it will break the same to once again fall below the 200-day EMA before getting into a long run-up?
The Nifty has been moving up like expected, after it formed a low near the Gann support level of 18,838 in October. The move on the upside is along with gap-up openings and the same has remained unfilled so far. So, the overall trend over the short term is bullish but after the Diwali week, we can again see some profit-booking and move on the downside as per the Elliott wave pattern.
Also read: Diwali picks: 10 stocks recommended by 4 analysts for extra bright portfolio returns
Prices are forming a big triangle pattern with the upside hurdle near 19,700 – 19,750 and downside immediate support at 19,330. A move below 19,330 will be the first sign of weakness for a move to 19,100. As long as 19,330 is intact, one can buy the dips for short-term trading.
From a medium term perspective, we can see rangebound move in 19,100 – 19,700 levels in November and in buying can emerge again in December.
So, there can be brief consolidation before the up move resumes again from medium term perspective. During such scenario, the stock specific action to continue and use dips to enter stocks in uptrend as first half of 2024 can be good for equities.
What should be your best strategy to trade in Nifty and Bank Nifty for rest of this month?
The Nifty in November can move between a broad range of 19,700 – 19,100 as mentioned earlier. For Bank Nifty, there is a major price action hurdle near 44,300. It will not be easy for prices to surpass this level unless strong buying emerges across banking stocks. On the downside, 43,000 is support. So, Bank Nifty can move in the broad range of 44,300 – 43,000 levels before any directional trend can emerge.
The rest of November can see a rangebound movement or consolidation phase since we saw sharp selling in October and now prices are trying to retrace a portion of that fall. This rise can be wave 'b' from Elliott wave perspective and then we can start wave 'c' of a triangle pattern. In a nutshell, expecting rangebound movement between 44,300 and 43,000 in Bank Nifty.
Your top three positional picks on this Diwali...
Prism Johnson looks to have formed classic rounding bottom and is giving positive breakout after forming triple bottom near Rs 100 levels. The stock can be bought for target of Rs 200 as long as Rs 120 remains intact on downside.
Quess Corp has given a strong breakout in previous week with huge volumes. This stock is possibly starting the 3rd wave higher for move to Rs 550 with Rs 420 as support.
Torrent Pharma is showing impulsive rise as per Elliott wave and is again resuming the up move. The stock has important support at Rs 1,800 and now can move towards Rs 2,500 levels on upside.
Also read: Chartist Talks | Rohit Srivastava sees 400-point Nifty rally in coming days
Do you see a double top kind of confirmation in the Adani Power stock on the weekly charts? Will it correct up to around 50-day EMA?
Adani Power is at crucial levels. It has not yet formed double top. Only break below the support of Rs 375 will confirm it is forming double top pattern. But until then it is best to use dips to buy this stock for a move to Rs 450 levels as long as Rs 375 remains intact.
Is Zomato consolidating for another leg of rally soon? Will it hit its record high by end of this year?
After a rally, Zomato is consolidating in a small range on the daily chart. The overall outlook remains positive. Buy on dips approach would be preferable to ride the trend. We can expect dip towards Rs 115 levels and after which a next leg up which can lift price further higher towards Rs 135 levels.
Do you expect the rally to continue in Nifty Midcap and Smallcap 100?
Yes, I expect the rally in Nifty Midcap and Nifty Smallcap 100 to continue in the coming months. Both indices are currently in a bullish trend and the technical indicators are pointing to further upside.
Midcap and smallcap stocks are typically more growth-oriented than largecap stocks. This means that they are better positioned to benefit from a strong economic recovery.
Technically we are near all-time high which is likely to breach in the coming days and buying to continue further. There is no sign of divergence yet on momentum indicator thereby keeping the up move healthy as of now.
Follow Ashish Kyal on Twitter - @kyalashish
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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