"Selective technology stocks are doing good and hence one should have exposure to those stocks," said Jay Thakkar, Head - Alternate Research, Capital Market Strategy at Sharekhan by BNP Paribas, in an interview with Moneycontrol.
He feels Cyient and Sonata Software are looking positive for the long term whereas Wipro and L&T Technology Services are looking good for the short term.
Jay, who has 13 years of experience in capital markets and specializes in technical research, derivatives, and quantitative research, suggests that due to weak earnings from two major Nifty companies, the Nifty is unlikely to surpass the 20,000 mark during the monthly F&O expiry for the July series.
He feels the next week is going to be very volatile and the range for Nifty50 is 19,300-20,000.
Q: Is it a great time to add exposure to technology stocks?
Selective technology stocks are doing good and hence one should have exposure to those stocks. Not all companies have provided weak guidance like that of Infosys. IT stocks across the world have recovered and the same trend is evident in India.
Stocks like Cyient and Sonata Software are trading at lifetime highs and the outlook for them is positive whereas the rest of the IT stocks are trading below their lifetime highs, however, Cyient and Sonata Software are looking positive for the long term whereas Wipro and L&T Technology Services are looking good for the short term.
Q: Is it difficult for the Nifty to get through 20,000 mark in the coming week?
The Nifty is unable to get surpass the 20,000 mark because of the weak earnings by two of the major Nifty companies, so the expiry for the July series is likely to be below 20,000 levels and on the lower side, the crucial support levels are 19,500-19,300 levels. The next week is going to be very volatile and the range is 19,300-20,000.
Q: Two stocks that can possibly give a swift rally next week...
United Spirits have provided a breakout from a huge consolidation and are backed by good results as well. State Bank of India too looks quite positive for the week ahead as it too has provided a strong breakout above Rs 600 levels.
Also read: Bain Capital seals deal to acquire Adani Capital; Gaurav Gupta to stay on as MD
Q: Do you think the Nifty FMCG will get through the 60,000 mark before seeing major consolidation or correction for a long period?
Nifty FMCG is likely to consolidate for some time now within a range of 55,000-50,000 levels i.e. it is a range of almost 10 percent and in this rangebound trade, there will be stock-specific activities.
Few stocks like United Spirits, Radico Khaitan, Colgate Palmolive, ITC, and Britannia may continue to do well whereas others like Hindustan Unilever, Dabur India, and Marico may continue to trade with a sideways to negative bias, hence Nifty FMCG may consolidate overall.
Q: What are the most important things to consider while applying any technical strategy? How do you manage risk and exits?
There has to be a defined trade set up which should include the price parameters and momentum parameters. Price parameters like Dow Theory, Candlesticks patterns, Bar Chart Patterns, and Fibonacci retracements will provide defined targets and stop-loss based on which one can assess the risk-to-reward ratio. If it is suitable then one can trade on it.
Also read: Market Outlook: After IT pain, bulls look to banks to resume record run
The momentum parameters like RSI (relative strength index), MACD (moving average convergence divergence), KST (know sure thing), Bollinger Bands, and Super trend are important from the point of view of gauging how quick the move is likely.
Q: FIIs seem to be backing Bank Nifty. Do you think the momentum will take the index beyond 50,000 this year itself?
Bank Nifty is trading at an inflection point and 46,200-46,500 levels in the upside are very critical as only a close above 46,500 levels will confirm the overall larger breakout else it may consolidate with a range of 46,500-44,500 levels. So, above 46,500 levels, the 50,000 levels will be achieved in a couple of months to come.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
