Kunal Bothra, independent market analyst, believes the 11,650-11,700 could be a near-term target for Nifty. What made him conclude this? Read on to find out:
ET Now: One up day, one really down day and then another up day; where do we stand for Monday?
Kunal Bothra: All of the five market days this week were completely different in texture of the market mood and the net result at the end of the week is that Nifty managed to end that five weeks of straight declines and close on a positive note.
There are a lot of positives which came back into the market, especially on Friday – the India VIX ebbed, crude came back to the $80-mark from those multi-year high and rupee recovered to close below the 74-level.
And then when you look into the markets internally, there have a lot of positives because of defensive stocks or sectors like IT and pharma. They were the ones which saw a bit of correction which shows that the risk appetite is coming back to the markets and that is a positive sign. Overall, the next couple of weeks you should see the markets stabilising and gradually inching up higher. From a one-week perspective, the 11,650-11,700 could be a near term target for Nifty.
ET Now: Do you sense a further rise in any of the OMCs?
Kunal Bothra: There should be a continuation of an up move because the last two weeks have been extremely volatile. Last week, the stocks were down 40-50 per cent and this week most of them have managed to recover more than 50 per cent of their losses.
Generally, when there is a sharp V-shape kind of a pattern there is some level of extension which happens but this could only be just a short-term trading extension. This is because these stocks have not just corrected over the last two or three weeks but rather this correction is ongoing since last one year approximately.
Last year, same time, we were talking of multiyear highs for these OMCs. So, there should be more consolidation which one can spot in the long-term. However, on an immediate basis, the next couple of weeks should bring some positivity back into the OMCs.
ET Now: Do you sense any trading opportunity in any of the NBFCs?
Kunal Bothra: There now two completely demarcated territories for the NBFCs when I scan through those price appreciation – the open interest data and the volumes which panned out. And the more favoured names are the ones on the largecap side, especially Bajaj Finance or even a Bajaj Finserv as they both have shown strong recovery patterns.
What has transpired in names like DHFL and most of the other NBFC stocks is that the correction was extremely sharp and then there was a shallow recovery in comparison to what happened for the largecap names. So, now if a short-term trader or an investor is trying to act bullish then the bias would be more on the largecap front.
ET Now: What is looking tradable for Monday morning?
Kunal Bothra: Last week Maruti made a very good comeback after almost three or four weeks of straight correction. It managed to close on a positive note and in that process, it has formed a Bullish Hammer Pattern on the candlestick pattern on the weekly timeframe. The stock should make or rather continue this uptrend for at least the next one or one and a half week.
I would suggest a buy on Maruti with a target of Rs 7,600 and a stop loss at Rs 7,100.
And the other chart which is very interesting is Godfrey Phillips. Over the last four or five months, the stock has made a pattern of lower highs and lower lows but when you scan through those indicators on weekly and monthly charts, those indicators have in fact made a higher bottom every time.
This stock could be in the process of a big reversal from the current levels. Last week was a sign of that. The stock should see a continuation on the upside. Godfrey Phillips is also a buy, with a target price of Rs 800 and a stop loss of Rs 700.