Nifty: Nifty bullish, may touch 22400 soon: Analysts

Most technical indicators suggest a bullish formation in Nifty, indicating a potential test of the 22,400 level soon. However, technical analysts note that the ascent might be gradual due to the underperformance of bank shares. Infosys, Cipla, Aditya Birla Capital, LIC Housing, Aptus, Bharti Airtel, Birla Soft, Canara Bank, IOC, PNB, RIL, Tata Consumer, Tech Mahindra, and Wipro have positive setups.


Where is Nifty headed?
Following Friday’s rally, Nifty has confirmed a move above the three-digit Gann number of 218(00) and a bullish ABC break on the point and figure (P&F) chart, implying the end of the recent consolidation phase. Fresh momentum and participation of index biggies add credence to Friday’s breakout. The vertical count suggests an extension towards the 22,400 zone. Bank Nifty is a cause of concern as its underperformance persists.

What should investors do?
Despite Friday’s 5% uptick in the Nifty IT index, it is still trading below the January 2022 peak. Meanwhile, our customised Midcap IT index has surpassed a peak of ’21, highlighting strength. Continuous bullish patterns in LTI Mindtree and L&T Technology suggest a further rally of 10-12%. Similarly, our customised housing finance companies index has broken above the 2021 peak, signalling a continuation of the recent momentum. Within the space, LIC Housing Finance and Aptus are expected to outperform from this space.


Where is Nifty headed?
Nifty looks set to test 22,150 and then 22,500. However, the pace of the rise could be gradual due to the prevailing underperformance of banks. In case of any profit taking, the 21,150-21,500 zone would continue to act as a strong support. What should investors do?
We suggest continuing with the “buy on dips” approach across sectors, barring the banking, until it decisively crosses the 48,400 level. The broader indices are also trading in tandem. However, we suggest giving preference to index majors and large midcap counters, citing the overbought reading. Based on technical formations, traders can consider the following for short-term trades: Aditya Birla Capital, Cipla, Crompton Greaves, Indian Hotels, Infosys, Siemens and TVS Motor.


Where is Nifty headed?
Nifty has to hold above 21,800 for an up-move towards 22,000, then 22,222. Support exists at 21,650 and 21,450. Bank Nifty has been consolidating between 46,900 and 48,400 for the last 25 sessions in which declines are being bought but follow-up buying is missing at higher zones. It formed a bearish candle on weekly while a small bullish candle on daily scale, which indicate some more consolidation could be seen before the index starts the next run-up.

What should investors do?
Sector-wise bullish setup is seen in IT, CPSE, power and energy. Stock-wise positive setups seen in Bharti Airtel, Birla Soft, Canara Bank, Coforge, Dixon, Gail, Godrej Properties, HeroMoto, Infy , IndianOil, MGL, OFSS, Persistent, PNB, RIL, Tata Consumer, Tech Mahindra and Wipro.

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