Nifty50 regained 18,300 points on Friday, thanks to the weekend’s stellar rally. What were the main reasons that pushed the markets higher during the week?
Financial services and information technology stocks were the main contributors to the rise of the Nifty 50 this week. Both were up more than 2% for this week. The weight of these two sectors combined in Nifty is more than 51%. Seven of the top 10 heavyweights in the Nifty 50 index belong to these two sectors. All worked well during the week.
Nifty Bank hit new highs during the week, outperforming the Nifty50 index. Do you see him maintaining the momentum? If so, what are the main support and resistance levels for the index?
Yes, Bank Nifty will maintain its bullish momentum. The banking index on the weekly timeframe saw an upside break above its horizontal trendline, which sits at 41,800 levels. Key support for Bank Nifty is at 41,650 followed by 41,000 levels and immediate resistance will be at 43,000 levels.
For the current expiry, how should traders plan their strategy to maximize the returns of Nifty and Bank Nifty? Do you think now is a good time to short either index?
Currently, both indices are trading in a higher and higher formation on the daily charts, indicating a classic uptrend. As they say, “Trend is your friend”, do not think of shorting without solid confirmation.
As both indices are trading higher, the buy dip strategy can be used as we can see a marginal price pullback. One should continue to follow their stoploss higher as the trend progresses.
PSU banks have been the best performers of late, with the index up around 7% over the week. What is your opinion on public lenders? Do you think there is more steam left in them? If so, what are your best choices?
It looks like the PSU banks may be taking a break for now and staying in the backseat. Private sector players alike were up nearly 8% over the week. Other private banks could join next week.
The Nifty Private Bank/PSU Bank ratio suggests private bank underperformance may end for the time being. We could see a rotation of PSU banks, which have been up a lot over the past few weeks and now it looks like it will be private banks’ turn to move up next week.
After the beating, IT stocks are back among investors. Do you see business opportunities there? If so, what stocks should investors be looking to trade in the short term?
Samco has been consistently bullish on IT stocks since June 2020. We believe IT stocks have bottomed not only in India but also in the US. The percentage of Nasdaq 100 stocks trading above their 200 DMA had bottomed out at 9% in September 2022.
We had seen similar levels during the Covid lows and in 2008. The rally we saw this weekend in the US and the Nasdaq in particular, indicates that there is more steam left in the IT sector. Indian IT stocks are available at attractive valuations. It is therefore a great opportunity to invest in US and Indian IT stocks. One can go ahead and buy Nasdaq and Nifty IT ETFs.
There are warning signs that attrition in the Indian IT sector has peaked. New corporate hires began and margins began to gradually increase. The recent fall in IT stocks has made valuations attractive. Current-level entry into high-level IT stocks can reward investors handsomely in the future.
Pharmaceutical stocks remained under pressure this week. Do you see them more prone/vulnerable to falling more? Which counters should investors choose and/or avoid in the pharmaceutical pack, based on the charts?
A few weeks ago, the pharma index gave a downside channel pattern breakout, so we can consider this week’s drop as a pullback near its trendline support, which is placed at 12,800 levels.
Not all pharmaceutical ingredient stocks in the index show signs of active participation, but some are strong and outperform the Nifty Pharma index.
Based on a larger time frame,
and showed a positive breakout and will most likely continue their outperformance.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)