Nifty likely to touch 17,900 with strong support at 17,300

Technical analysts expect the benchmark Nifty to touch 17,900 this week. Investors can buy on every correction as 17,300 levels could be a strong support going forward. HDFC Bank, Reliance Industries, Infosys, Tata Steel, L&T and ITC are among the top trading picks of analysts for the week.DHARMESH SHAH HEAD, TECHNICAL ICICI SECWhere is the Nifty headed this week? We expect Nifty to head towards 17,900 in the truncated week while midcaps could relatively outperform. Use the dips to buy as strong support exist at 17,300. Strength in Indian equities is well supported by a strong correlation with developed market indices. Last week, Nasdaq and broader Russell 2000 indexes registered a breakout from a falling channel of the past seven months. The percentage of stocks in Nifty500 above 200- day EMA has risen to 46% against a reading of 30% two weeks ago and the lowest reading of 14% at June lows. The sequential improvement in breadth using longterm indicators signifies broad-based participation in a rally. What should investors do? We advise investors to use dips towards 17,400- 17,500 as an incremental buying opportunity. Sectorally, BFSI, IT, Auto, consumption, capital goods, and metal remain focused, with midcaps outperforming large-cap peers. Our preferred large caps for 5-7% upside are HDFC Bank, Reliance Industries, Infosys, Tata Motors, and L&T; while in midcaps, Aditya Birla Fashion, V-Guard, SAIL, KPIT Technologies and Apollo Tyres are expected to gain 8-10%. PRITESH MEHTA SENIOR VICE PRESIDENT – RESEARCH, YES SECURITIESWhere is the Nifty headed this week? Last week, Nifty posted gains for the fourth consecutive week and, in the process, overcame several critical levels (i.e., point of equality and three-digit Gann number of 17,600). Currently, it is hovering around a downward sloping trendline drawn off the peak. Nifty’s breadth is in an overbought zone. Such extreme exuberance in short-term breadth often leads to price-wise or sideways correction, yet sectoral churning and strength in index biggies keep the index afloat. In such a scenario, an up-move could extend towards 17,900-18,000 with a stock-specific rally. What should investors do? The market is now clearly momentum driven. When such a market assumes the center stage, focusing on upside targets is not advisable. Till correction happens or telltale signs of exhaustion become visible, traders can gainfully ride the current up-move. Metals have rebounded sharply. The ratio of metals vs Nifty has surpassed the peak of June, likely to result in the continuation of metals’ outperformance. Within the space, a bullish turtle breakout is in play in Tata Steel & SAIL, suggesting a rally of 10%SUDEEP SHAH HEAD - TECHNICAL & DERIVATIVES, SBI SECURITIESWhere is the Nifty headed this week? Markets continued the positive momentum with the Index closing in the green for the fourth consecutive week. The Volatility Index, India VIX, also has slipped to 17.4 levels indicating that volatility is gradually subsiding and thus providing a comfort factor to the bulls. Chart patterns suggest that the zone of 17,450-17,500 will be strong support going forward. Till the index sustains above 17,450, we may witness a continuation of this rally up to 18,050-18,100. However, if the index slips below 17,450, weakness could persist up to 17,230- 17,150. Options data suggest a broader trading range of 17,400-18,050 for the week. What should investors do? Investors should look to buy the dips till 17,450 levels are not breached on the downside on the Nifty and should accumulate quality stocks. At the same time, traders should focus on stocks and sectors that are relatively outperforming the Nifty. While positive momentum and outperformance may be witnessed in large- and mid-cap stocks from the capital goods, power, banking, as well as hospitality sectors (unlock theme), an attractive risk-reward proposition could be witnessed in stocks from the metal and realty sectors. Our preferred large-cap picks are L&T, ITC, RIL, Tata Motors and HDFC Bank. In mid-caps, stocks like BoB, Deepak Nitrate and BEL could continue to see strong buying interest.

Nifty likely to touch 17,900 with strong support at 17,300
Technical analysts expect the benchmark Nifty to touch 17,900 this week. Investors can buy on every correction as 17,300 levels could be a strong support going forward. HDFC Bank, Reliance Industries, Infosys, Tata Steel, L&T and ITC are among the top trading picks of analysts for the week.DHARMESH SHAH HEAD, TECHNICAL ICICI SECWhere is the Nifty headed this week? We expect Nifty to head towards 17,900 in the truncated week while midcaps could relatively outperform. Use the dips to buy as strong support exist at 17,300. Strength in Indian equities is well supported by a strong correlation with developed market indices. Last week, Nasdaq and broader Russell 2000 indexes registered a breakout from a falling channel of the past seven months. The percentage of stocks in Nifty500 above 200- day EMA has risen to 46% against a reading of 30% two weeks ago and the lowest reading of 14% at June lows. The sequential improvement in breadth using longterm indicators signifies broad-based participation in a rally. What should investors do? We advise investors to use dips towards 17,400- 17,500 as an incremental buying opportunity. Sectorally, BFSI, IT, Auto, consumption, capital goods, and metal remain focused, with midcaps outperforming large-cap peers. Our preferred large caps for 5-7% upside are HDFC Bank, Reliance Industries, Infosys, Tata Motors, and L&T; while in midcaps, Aditya Birla Fashion, V-Guard, SAIL, KPIT Technologies and Apollo Tyres are expected to gain 8-10%. PRITESH MEHTA SENIOR VICE PRESIDENT – RESEARCH, YES SECURITIESWhere is the Nifty headed this week? Last week, Nifty posted gains for the fourth consecutive week and, in the process, overcame several critical levels (i.e., point of equality and three-digit Gann number of 17,600). Currently, it is hovering around a downward sloping trendline drawn off the peak. Nifty’s breadth is in an overbought zone. Such extreme exuberance in short-term breadth often leads to price-wise or sideways correction, yet sectoral churning and strength in index biggies keep the index afloat. In such a scenario, an up-move could extend towards 17,900-18,000 with a stock-specific rally. What should investors do? The market is now clearly momentum driven. When such a market assumes the center stage, focusing on upside targets is not advisable. Till correction happens or telltale signs of exhaustion become visible, traders can gainfully ride the current up-move. Metals have rebounded sharply. The ratio of metals vs Nifty has surpassed the peak of June, likely to result in the continuation of metals’ outperformance. Within the space, a bullish turtle breakout is in play in Tata Steel & SAIL, suggesting a rally of 10%SUDEEP SHAH HEAD - TECHNICAL & DERIVATIVES, SBI SECURITIESWhere is the Nifty headed this week? Markets continued the positive momentum with the Index closing in the green for the fourth consecutive week. The Volatility Index, India VIX, also has slipped to 17.4 levels indicating that volatility is gradually subsiding and thus providing a comfort factor to the bulls. Chart patterns suggest that the zone of 17,450-17,500 will be strong support going forward. Till the index sustains above 17,450, we may witness a continuation of this rally up to 18,050-18,100. However, if the index slips below 17,450, weakness could persist up to 17,230- 17,150. Options data suggest a broader trading range of 17,400-18,050 for the week. What should investors do? Investors should look to buy the dips till 17,450 levels are not breached on the downside on the Nifty and should accumulate quality stocks. At the same time, traders should focus on stocks and sectors that are relatively outperforming the Nifty. While positive momentum and outperformance may be witnessed in large- and mid-cap stocks from the capital goods, power, banking, as well as hospitality sectors (unlock theme), an attractive risk-reward proposition could be witnessed in stocks from the metal and realty sectors. Our preferred large-cap picks are L&T, ITC, RIL, Tata Motors and HDFC Bank. In mid-caps, stocks like BoB, Deepak Nitrate and BEL could continue to see strong buying interest.