Nifty and Nifty Bank ended the first week of 2022 on a negative note. What are the weekly charts telling you this week? What are the key levels to monitor?
On the weekly chart, Nifty is currently hovering around the critical support zone, ie the 17800-17750 area. The support junction coincides with 20 WEMA, the polarity support and the 50% retracement level of its previous advance from 16747 to 18887. Also at the confluence of the support index formed inside the pattern bar highlights volatility compression. Therefore, if the mentioned support zone holds, we feel a rebound towards 18200-18400. While failing to hold support, the index should see an acceleration in selling pressure that would take Nifty lower towards 17500-17200.
Bank Nifty consolidated in the narrow range (about 2200 points) of the past few weeks after hitting an all-time high. Currently, prices are placed around the lower band of the range (41,500) which also coincides with the 38.2% retracement level of its previous advance from 37,389 to 44,152, and Polarity support. Going forward, if 41,500 is protected, we expect Bank Nifty to rebound towards the 42,500 – 43,000 levels. We will become cautious if the support is broken and expect the index to drop towards 40,800-40,500.
PSU stocks look unstoppable ahead of the budget. Do you see profit booking possibilities at the end of the month?
The PSU index has rallied strongly over the penultimate week as it has remained subdued over the past week closing near the previous weekly close. The index also continued to show stronger relative strength against the benchmark 50, with the major moving averages showing a positive slope. This confirms the potential strength of the trend. The 4250-4180 area holds immediate support for the index going forward and will act as buying opportunities provided Bank Nifty holds above 41500.
How to play IT stocks before the earnings season which starts from Monday?
We expect a lackluster earnings season from major IT companies, due to weak performance in key verticals and geographies. Technically, the index broke its previous intermediate support of 28,000 and the 61.8% retracement level of its previous advance with a break of the tight Bollinger Band indicating lack of strength and an expansion in volatility at the decrease. Therefore, we believe that investors should take a cautious approach in the IT package, as we believe that better opportunities will be available in the future to invest in the sector.
“ Back to recommendation stories
What does the Bajaj Finance chart look like after the pressure seen on Thursday and Friday?
Bajaj Finance broke below a multi-year ascending support trendline on relatively higher volumes with a marubuzo candle amplifying the bearish tone on the weekly time frame. Relative strength has deteriorated significantly, breaking below key support, RSI trends below the median with a negative slope, as does the MACD below the zero line with a negative crossover. The Rs 6200 strike has an overriding call open interest that implies stronger resistance, hence we reiterate to avoid on Bajaj Finance until it holds decisively above the Rs levels 6200.
What are the 3-4 key titles that would be on your radar in the coming week?
1. Buy with a target price of 293 with a stop loss below 266
2. Buy with a target price of 3850-3880 with a stop loss below 3550
3. Buy PNCINFRA with a target price of 350 with a stop loss below 300
4. Sell LalPathlab with a target price of 2130 with a stop loss above 2280
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)