Ashish Nambisan: Last week it was stated that “As per the daily charts of Nifty 50, bulls will remain active till 23700 is protected on the downside where one can take a risk of going longs with a strict stop of 23500 for the target of 24000/24200. On the contrary bears will also try to again defend the mark of 24000/ 24200 on every rise where traders can take a risk of going shorts with a stop of 24350 which would be 150 points on the upside”. What happened next? Index slipped near the mentioned support of 23400 and placed a low at 23460 and our bullish view target of 24200 was met placing a high of 24226.70 where we also suggested that bears will utilize this area for going shorts and it resulted into a corrective scenario after meeting the targets of 24200; we slipped back till 23976 again after placing a high of 24226.70. So, what to expect going ahead should be the million-dollar question.
Let’s, put an eye on international front to understand things more deeply. Now looking at the currencies we can see strength in dollar due to a slower pace of interest rate cuts by the Federal Reserve in 2025. We also witnessed that the Chinese yuan was among the worst performers in Asia, hitting the weakest level against US Dollar breaching the milestone of 7.3 after 2023. Financial Times reports said the People’s Bank of China will cut interest rate further in 2025. However, a drop past 7.41 will take this currency to its weakest level after 2007 which seems on cards. Reuters have also reported last month that authorities have agreed to issue 3 trillion-yuan worth of special treasury bonds in 2025. The world’s second-biggest economy has struggled over the past few years due to severe property crisis, high local government debt and weak consumer demand. While, exports one of the few bright spots, could face more U.S. tariffs under trump administration.
The Dollar Index hurried to fresh 2-year highs above 109, perhaps after the weekly jobless claims data read stronger than expected, indicating that the labour market remained strong which eventually helps the Fed more headroom in considering future monetary easing. A strong labour market should cast out any near-term expectations from the Fed.
Now, coming back to Indian markets, FIIs on Friday remained net sellers in cash worth 4227 crores while DIIs were net buyers in cash worth 821 crores. After showing signs of consolidation near 200 dema Nifty 50 gained more than 400 points till 24226. A good positive rally after few weeks shows some signs of respite but the million-dollar question remains “Was this a dead-cat bounce”? Well, I would say it’s too early to predict that, however looking at the current chart placements it seems we are in a stage of furnishing a bottom but considering the bear punch from 24200 to 23876 which was already warned by us: that the upside seems restricted at 24200 and we also mentioned to go short at 24200 and thus we nose-dived back again below 24000 henceforth the much awaited trend change would be seen only if we managed to close above 24200, lastly everything happened as predicted by us, we saw an upside rally till 24200 and the upside rally lost its sheen and we ended again close below 24000 in Nifty 50.
On Friday Heavy call writing was seen at 24200 strike CE with OI additions of more than 76 lakhs while put writing was seen at 23800/23700 strikes. Looking at the overall price actions higher lows and higher high formations were hinting towards a positive close but on Friday we again dropped back to close below 24000 which again says that we may again go back to corrective/consolidation phase.
Conclusion: Traders can watch 23900 level closely where bulls can attempt longs. Dips till 23700 should be used for longs while supports remain 23400/23200 meanwhile upside seems to be restricted at 24300. Avoid going shorts below 24000 focus to buy near 23900/23700 which is a support zone with stop below 23400/23200. Upside seems restricted near 24200/24300 on the other hand downside supports remains intact till now of 23400/23200, I would say as of now remain focused to buy the supports of 23700/23400 with stop of 23200 and attempt shorts only near 24200 with strict stop of 24350. Although technically, we are still holding above the bullish territory of 200 dema. So, my suggestion is do not go short in Nifty below 24000 rather focus on longs near 23900/23700.
Needless, to say unless we do not close above 24200 for 2 consecutive days, we should not consider this upside as a change in trend but once this level is taken, we will see a change in trend. Those who have created shorts at or near 24200 and are still holding should try to book profits as technically we haven’t breached 23400/23200 on the downside yet, so either take profits or keep trailing your stops.
NOTE: Be cautiously optimist, stay prudent and act with levels while maintaining stops strictly. The crucial points of Nifty 50 remain 23200 on downside while 24300 on the upside. Any further move should be expected only after the breach of these levels. Do not forget that technically we are still maintaining above the edge of the bullish zone so be sensible on your short positions or wait till we breach below 23200 on Nifty50.
Sectors to watch for next week
- Auto looks positive cmp is at 23961 an up move above 24195 we may see 24500/24800 while the support is seen at 23700/23300.
- FMCG looks positive cmp is at 57860 the support remains at 57250 an up move is expected till 58500 and more.
- Pharma looks positive cmp is 23244 while the downside seems restricted at 23000/22800.
*Last week we suggested to buy Crude and it achieved the target of 6300 placing a high of 6355.
Stock suggestions for next week are as under:
- Ashokley cmp is at 234 buy either on dips at or near 231 or above 238 the supports are seen at 229/226.
- Marico cmp is at 660 buy this stock with a stop of 630 for a target of 685/710
- Maruti cmp is at 11907 buy with stop of 11500 target 12400/12900
- Itc buy at cmp 484 stop at 477 target 500 positional traders should keep a stop of 473
- Ipcalab buy at cmp 1736 stop 1660 target 1850/1950
- Buy Hul cmp 2403 stop 2350 target 2530/2540
Commodity suggestions for next week are as under:
- Ng had achieved all our previous given targets till 342 and we have been bullish in this commodity from 248 and it achieved all our upside targets of nearly 100 points. Now on Friday we saw a correction till 287 after forming a top at 355 and this looks like an opportunity to again re-enter this commodity. I would like to contra trade and buy this commodity with a strict stop at 280 a possibility of an attempt to again touch 318/320 on the upside cannot be ruled out. Be strict with your stops.
- Gold seems to be in a consolidation face between 76000-77500 one can attempt a buy near 77000 with a stop of 76750. The cmp is at 77266
- Silver is not breaching the supports of 86500 and seems it has already formed bottoms at these levels. Buy Silver near 89000 with a stop of 88200, while positional traders can keep a stop of 87300 for an upside target of 91500/93000.
- Crude Oil is on the verge of breakout, it also managed to give a positive weekly close above 6350 so if on Monday crude remains above 6350 then an upside rally till 6500 cannot be ruled out.
