1) Friday’s sharp swing on both sides was very surprising and made it tougher for both sides to make money. Such volatility is rare on non-newsy sessions. Do you blame it to Sensex expiry?
More than 50% of the index stocks saw a bounce back of atleast 2%. Similar performance was seen among NSE 500 stocks too, suggesting that the recovery swing was broad based, and not attributed to Sensex expiry as such. That said, Friday’s swings were not surprising if you view the downmove and upmove independently. While the downsides at open were expected given the direction of the previous days’ trend, the upswing thereof found support from the fact that the sluggishness had persisted through the week without major news break setting up conditions for mean reversion move.
2) Nifty ended the week on a positive note but Nifty Bank was dragged down. How would you trade weekly expiry in the coming week?
While both of them had hammer candle stick patterns on Friday recouping lot of lost ground, Nifty covered more ground. Yet, both managed bullish engulfing patterns, encouraging us to approach next week on a positive frame, despite the event risks. However, when compared to last fewer stocks are now above their 10 day SMA. But, 58% this Friday, as opposed to 68% last Friday is not a significant turn in trend or its strength, but does warrant a “buy on dips” approach, rather than chasing rallies, as suggested by the exuberant weekly close.
3) IT stocks have been in demand and the IT index ended xx% higher. Do you see more steam left in the IT pack?
We expect IT pack to pick up more pace. Nifty IT Index has been on an upside since the middle of November after it broke above the trendline resistance of 42960 and is currently trading in unchartered territory. Weekly MACD has broken above the signal line which is hinting at more upside for the index in coming weeks. Index constituents like TCS, Infy, Hcltech, LTIM and Techm, which forms around 80% of the index, looks strong enough to lead the index further up towards 49000 in the near term.
4) PSU banks have been under some selling pressure. Any names where you would like to do some bottom-fishing?
Nifty PSU Bank index had broken out of the weekly declining trend channel two weeks ago and the trend seems to be intact even after the recent dip. The weekly MACD has crossed above the signal line favoring more upsides. In the extreme short-term charts, a long legged Pinbar Doji was formed yesterday hinting at attempts to move back to the upside trajectory after week long consolidation. Over 90% stocks are having 14-day RSI above 50 showing that they have not lost it all. Similar strong weekly patterns are visible in heavyweights like SBIN, Bankbaroda, PNB, IOB, Canbk and Bankindia, which together forms around 75% of the PSU Bank Index and expect these stocks to lead the index towards 7300-7440 initially in coming weeks and thereafter towards 8000 levels. Specifically, we would focus on Bankbaroda, PNB and IOB in the coming weeks.
First published in Economic Times