What do you think is the key point to watch in the coming week?
This week has been quite positive for Nifty and Bank Nifty, but the market, particularly Nifty, has reversed from its key 17,800 level on the upside. Of course, monetary policy is going to be the only thing we should expect in the coming week. Now, we also have to look at how ready the world markets are. After almost a week, the US markets reversed, especially the NASDAQ, quite sharply. Next week will be more sideways to negative trading. The overall range for Nifty would be from 17,800-17,850 on the upside to around 17,200-17,300 on the downside. The Nifty PCR is trading around 1.5-1.52 and this is the upper end of the range. On the other hand, I would say that Bank Nifty has taken support at good levels around 38,500. So the Bank Nifty range for next week would be 39,500 to 38,500; whichever side we see that range break, you would see an additional 1,000 point move. The PCR on Bank Nifty is trading at a comfortable level of around 1.10-1.11; compared to Nifty, Bank Nifty is less overbought from now on. I’d say we can focus on that, especially the PSU Banking pack where we’re seeing a lot of action coming up this week.
Metals as a whole did incredibly well, but some of the frontline computer names were a little slow; how would you trade them in the future?
Commodity prices are rising all over the world. Hence, the metals index also reacts quite positively to the same. The Nifty Metal Index is on the rise, with 6,000 as an immediate level to watch. On the other hand, 5,500 would be a good support. If the index breaks above 6,000, it is heading towards its all-time highs near 6,280-6,300 zones. Individual metal stocks are showing good strength and they have made a nice comeback this week. The positive momentum could continue at least into the beginning of next week. With regard to the IT index, the drop was quite steep, almost around 15%. From the all-time highs, whatever rebound we have seen so far or if we also see going forward would only be a rebound. Thereafter, the general trend would again reverse from top to bottom in the short term. Even in the medium term, the trend has moved from high to low. The IT index is a sell opportunity for me regardless of the upside we see.
What are your choices for the coming week?
I have two buy recommendations for next week and one is from Nifty Metal. The momentum for the metal pack this week has been quite positive and may continue next week as well. I have a buy recommendation on Vedanta. The way the stock provided a breakout from a falling channel, the indicators reversed from selling to buying in the short term. The stock is heading towards the Rs 370 to Rs 380 levels and one can buy at the last closing price somewhere around Rs 356; we can place a stop loss at Rs 344.
The second purchase recommendation concerns Biocon. It comes from defensive space. Biocon provided a breakout from the reverse head and shoulders pattern, which is a bullish reversal pattern. The stock managed to close above the levels of the Rs 385 area which turned out to be a multi-swing resistance zone. The stop loss will be at Rs 381; one can buy somewhere near the last closing price of Rs 391 for a target of Rs 415 to Rs 426 on the upside. Biocon is expected to outperform the markets next week and going forward as well.