Axis Bank was always pipped to rally spectacularly when it’s time came, given the neat continuation patterns that it had kept forming ever since the 2020 lows, says Anand James, Chief Market Strategist at Geojit Financial Services.
“However, three days of close above the upper Bollinger band has also resulted in the 14d RSI pushing above 70, setting up conditions for either a consolidation or a pull back. Further, more than 64% of the volume in the last five days were positional, and we have not seen such sustained buying in recent times. These factors reduce the possibility of fresh buying unless there are declines,” he says. Edited excerpts:
1) After ending at record high levels on Day 1 of the December series, what are the targets that you have for the rest of the month?
Nifty at new record peak lends new perspectives to the index’s constituents, and should egg them on further higher, despite being close to overbought territories, and the index’s weekly RSI also heading to 90, a level which has historically forced the index to turn lower. However, momentum is still in favour with ADX strong and the directional moving indicators not yet extreme. This allows window for Nifty to stretch atleast till 20500-600 before the calls for a turn higher becomes stronger. 20190/070 or 19800 could serve as downside markers until then.
2) Are you seeing chances of Nifty Bank scaling up faster than Nifty in the next few sessions? What would be your trading strategy?
Axis bank fuelled Nifty Bank’s outperformance on Friday, and there are hopes of more leaders emerging in the coming days. While more than 20% of Nifty 50 constituents already above 70 RSI, indicating overbought situation, only Axis Bank from the Nifty Bank index is in similar situation, giving an edge for Nifty Bank in terms of potential for further upmove. But, that said, constituents of Nifty Bank weighing around 60%, have seen delivery volume as high as 60% or more, in the last five days, signaling that a follow through buying in the index may be delayed. Meanwhile, Nifty has already broken the record peak, while Nifty Bank is still more than 3% below its record peak. This suggests more room for upside, which it will certainly catch up, but our bets are on Nifty 50 to move faster, as it finds new leaders, being a more diverse index.
3) Axis Bank was the top gainer in the Nifty pack with an upside of around 10%. What are the charts telling you?
Axis Bank was always pipped to rally spectacularly when its time came, given the neat continuation patterns that it had kept forming ever since the 2020 lows. Last fortnight’s rise marks a clean break away from a consolidation pattern that has been maturing since mid September, promises much ahead. However, three days of close above the upper Bollinger band has also resulted in the 14d RSI pushing above 70, setting up conditions for either a consolidation or a pull back. Further, more than 64% of the volume in the last five days were positional, and we have not seen such sustained buying in recent times. These factors reduce the possibility of fresh buying unless there are declines.
4) Adani Total Gas has been on a strong momentum amid positive news flow. Do you think the momentum will continue in the week ahead?
The breathtaking rise on the 28th of November, had incidentally taken price above Jun-Sep’s trading range, thereby registering three days of successive close above two standard deviations from means. But the last two days’ selling was accompanied by volumes not seen since on an average day during the last six months. This suggests that speculative positions are being unwound. Similar exhaustion seen in other Adani group stocks also suggest that a pull back may be due in Adani Total Gas.
5) What are your top ideas for the week?
KIRLOSENG (CMP: 583)
View : Buy
Targets : 609 – 635
Stoploss : 564
After making new highs in October, the stock has been consolidating and has seen a breakout from the consolidation range in the weekly time frame. Also, the MACD has broken above the signal line in the weekly as well as daily time frames indicating positivity in the near term. We expect the stock to move towards 609 and 635 in the next few weeks. All longs may be protected with stoploss placed below 564.
EVEREADY (CMP: 347)
View : Buy
Targets : 358 – 370
Stoploss : 336
The stock has been on a decline since September 2023 and has retraced Fibonacci 61.8% of the March 2023 low and August 2023 high. It has also formed a doji candle in the weekly time frame hinting at possibility of a pull from current levels. Also, the MACD forest has shown exhaustion at lower levels supporting our assumption for a pull back. We expect the stock to move towards 358 and 370 in the next few weeks. All longs may be protected with stoploss placed below 336.
First published in Economic Times
