It seems like a range-bound trading session for the markets. But how should investors place their bets because the Nifty has made a U-turn from the benchmark 25,000 mark?
Vinay Rajani: So, definitely a tug of war is going on between bulls and bears and a nice recovery was registered in the last three trading sessions. We have seen more than 500 points rise from the lower level, but somehow this 25,000 is a big hurdle and Nifty is not able to find its feet above that level; so that continues to remain a strong resistance. So, we are into consolidation.
Overall, choppiness is there and sector rotation is going on. It is doing well. Now banking has been performing weakly. We have seen in the past that IT and banking are having a negative correlation and the same is happening. I am a bit concerned about the Bank Nifty chart because last week we saw a bearish engulfing pattern on the weekly charts, and a bit of a cautious stance should be taken on the basis of that.
So, yes, we cannot still say that we are out of woods or any geopolitical issue or any particular news can again drag the Nifty downside. So, unless we get a close of about 25,000 in Nifty, we should remain cautious on the market because now we can see that for the last two trading sessions breadth has also been not supporting.
So, 25,000 is a very crucial level to watch out for. Unless we get close above that, we should remain cautious. On the lower side, if Nifty were to break 24,700 which happens to be Monday’s low, then momentum selling could again emerge in the market. So, right now, we are in a very choppy range. It is tough to take a directional trade for the traders. But I would like to suggest support and resistance. Resistance would be 25,000 and support is at 24,700 in the spot Nifty. Once that is broken, we can exit the trading long positions.
What are you making of the PSU banking stocks? Right now we understand there is a SEBI meeting today and we are expecting some news flow for the PSBs as well. Other than that, how are PSB shaping up on the charts right now compared to large private sector banks?
Vinay Rajani: Yes, PSU banks are actually looking strong on the positional charts. If I were to refer to the monthly and weekly time frame, they are still looking very strong on the charts and they can do well. We saw a breakout previously, but we cannot rule out the possibility of the short-term correction. So, overall, they are looking strong. Compared to the private sector banks, I still feel that PSUs are placed stronger on the positional charts. We can expect short-term corrections, but the overall trend remains bullish. We can expect 3%, 4%, 5% correction in the stocks in the PSU segment, but dips should be bought into if you are taking more than 15-day view in the market.
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