Following a sharp 17% rally in Zomato shares amid blockbuster results, the new-age stock could rally to Rs 292 in the near term, with a stop loss at Rs 252-240, says Anand James, Chief Market Strategist at Geojit Financial Services.
“Directional moving indicators and most oscillators point to strength and continuation of the uptrend. Fast stochastics have turned lower though, indicating volatility in the next few days,” he says.
1) How strong was Friday’s downside momentum for Nifty traders and do you 25,000 being the biggest resistance point?
Broader market, represented by Nifty 500 was showing signs of distribution all through last week with gains becoming flatter, even as Nifty kept advancing towards 25000 every day. This divergence between the broader market and the benchmark index came to a heading on Thursday, as Nifty’s gapped up opening above 25000 initiated a profit booking, which even while not stretching much, gave enough signs of bullish exhaustion that would eventually force a gapped down opening on Friday. Ideally, this move should see 24400-330 right away, but directional moving indicators are yet to signal momentum, and 49.6% of Nifty 500 stocks are still above 10 day SMA, suggesting that the next leg of downsides may require a period of consolidation initially. The congestion band at 24850 should resist most upsides, but a direct rise above 24940 could put Nifty back on to the 25800 trajectory. Its prospects of the same look limited for now, but may nevertheless be planned for, especially if the present downsides do not stretch beyond the 68.2 fibo of the recent high-low at 24540.
2) How would you go about trading Nifty Bank? What are the key levels to watch out for?
The index biggies, ICICIBank, SBIN, Axisbank and Kotakbank which together forms around 57% of the index, looks weak in weekly charts with weekly MACD signal break seen in SBIN and Axisbank. HDFCBank which alone contributes ~30% to BankNIfty index looks positive in daily as well as monthly charts and can lend support to the index. However, in all, only 25% of the index constituents are above their respective 10day SMA, suggesting that a weakness has already set in. While this suggest that a bargain hunting cannot be ruled out, the proximity of 50700, from around which a recent weakness was reversed, point to the potential for a deeper plunge to 48000. This warrants protective stops for longs at 50700.
3) Zomato was one the biggest gainers in the week by rallying around 20% amid optimism around Q1 results. Do you see the upside momentum sustaining in the week ahead? Any targets for short-term traders?
Directional moving indicators and most oscillators point to strength and continuation of uptrend. Fast stochastics have turned lower though, indicating volatility in the next few days, but with traders may continue eying 292 in the near term, with stop loss at either 252 or 240.
4) Nifty CPSE index jumped around 4%. Where do you think PSUs like NTPC and Coal India are headed?
Last week’s pull back added another leg to the upside with support from NTPC and Coalindia. IT could be a tug of war between the big five stocks in the Index. Among the big five in the Nifty CPSE index in terms of weightage, Powergrid, NTPC and Coalindia, which forms ~50% of the index, looks positive and could add to the positivity. However, ONGC and BEL, which together contributes close to 30% to the index, has seen a weekly Shooting Star candle and a weekly MACD signal break respectively, may dampen the upside prospects of the index. Key support for the index is seen around 7280 and 7131 levels.
5) Give us your top ideas for the week.
Buy Delhivery (CMP: 416)
Target – 455
Stoploss – 389
After moving within a Wedge pattern since January 2024, the stock has bounced off the pattern support of 365 last month and a pull back is underway. The weekly MACD is about to cross signal line and weekly RSI is hovering above 50 indicating strength. We expect the stock to move towarsd 455 in the next few weeks. All longs may be protected with stoploss placed below 389.
Buy HIndcopper (CMP: 310)
Target – 345
Stoploss – 294
After being in a profit booking mode since April 2024, the stock seems to have found a base near the 61.8% Fibonacci retracement level of 301 (March 2024 low and May 2024 high). MACD histograms in weekly charts have started to flatten hinting at exhaustion. We expect the stock to move towards 345 in the next few weeks. All longs may be protected with stoploss below 294 levels.
