Seems like a decent afternoon for the markets as well though there has been a decent recovery from the day’s lowest point, but for the past two days there was selling pressure indeed. So, what kind of a movement do you expect on the index level and specifically for the second half, do you expect that we can build on to some gains from these levels?
Vinay Rajani: So, in the last three sessions, we have seen almost 550 points correction in the Nifty, Bank Nifty also corrected by more than 1500 points. So, we can say this is a profit booking on the overall bull trend. If we go by the derivative data, long unwinding was seen in yesterday’s session where Nifty and Bank Nifty shared the open interest while they fell price wise. So, there was a profit booking, there was no short build up, so we can say overall trend of the market is still bullish, it is just a profit booking which is going on. And as you said that there has been a good sector rotation in the market and there are many stocks in the largecap segment also which are looking very good technically, they are giving fresh breakouts and follow-ups are also being registered, so that is a nice setup we can say. We are finding good opportunities as far as trading is concerned in largecap as well as in smallcap. Today, smallcap also is performing well. So, in yesterday’s trade, we witnessed a sharp correction in the largecap stocks, but many midcap stocks did their trend and actually overall breadth of the market has been good for last two trading sessions, so that is a good sign.
I think one should not worry about it. I think it is just a profit booking in primary bull trend. And as far as support for the Nifty is concerned, there has been a strong support at 25,700 which is a Fibonacci retracement level that we are tracking, so that is a strong support 25,700. And Bank Nifty also is looking good and around this level only around today’s low 52,800 that is a strong support we can say.
But instead of looking for the trade in the Nifty and Bank Nifty, I would suggest that you should concentrate on the sectors and stocks which are performing and showing great amount of resilience in this market. So, there are good opportunities in the stock specific and sector specific. But as far as Nifty, Bank Nifty is concerned, they may consolidate a bit around this level for a couple of sessions. But overall, I feel that at lower level, they will find support and bounce back and resume their uptrend. So, as of now, the strategy for the day should be to concentrate on the sectors and stocks which are actually resilient in this market.
Which is the sector then you have to watch out for in current market. Like you mentioned, we are seeing a lot of sector rotation and it is time to look at sector and stock specific moves. So, which is that sector that is shining bright for you? Is it the metal space that you are looking at or IT or auto or some other sector that you are looking at right now?
Vinay Rajani: So, to me, metal index is into a continuation of an uptrend and there has been multiple positive news for the sector and they have been showing good strength. So, today also, we have seen a good follow up coming in the aluminium stocks like Nalco and Hindalco.
Other than that, Vedanta is also into continuation of an uptrend and metal stocks and sector is a cyclical and it is a high beta sector and whenever it moves, it keeps on moving like this. So, even if we have seen a good, healthy upside in last three-four sessions, still I am expecting that this rally should continue on the upside.
So, metals can continue to perform well from here, so that is expected to do well and will keep on giving good alpha in the coming days. The second sector which I like is the IT. So, on 27th September, we witnessed a good gap up opening on the good global positive news in the IT index, but that did not sustain at higher level and sell on news kind of thing happened that day, but after two days of consolidation or minor correction, I feel that IT could again come back. They have bounced back nicely, but I feel that we are approaching a result season now, quarterly results and IT should bounce back from here and Infosys, Wipro, and Persistent Systems and Coforge, all stocks are looking strong on the charts.
So, IT is another sector and apart from these two sectors, metal, IT and the third sector is the chemical sector which has given a nice movement, so many chemical sector stocks are looking good like Atul Limited, Navin Fluorine. These stocks are moving well. So, we should also concentrate on the sector like chemicals. So, IT, metal and chemicals, these are the three sectors currently I am tracking for short-term trading.
Help us with your take on M&M as well. Though the stock did have a good day, that is up around 2.5%, but that is on the back of the auto sales number, but how do you see that technical setup for M&M because the stock is yet again approaching its all-time high levels. So, how to expect the movement ahead?
Vinay Rajani: Yes, so definitely it is hovering around its all-time high. All-time high was registered on 27th of September and that was at 3,222 and right now it is trading at 3,172. So, obviously it is looking very strong. We cannot go against the trend. It is looking very strong. On Monday, we saw it hit a low of 3,087 and today it has bounced back nicely.
For traders, the stop loss becomes Monday’s low, which is at 3,087. So, clearly it is into an uptrend. It is continuation of an uptrend and it is outperforming the auto sector also. As compared to the other auto stocks, this stock is looking very strong on the charts and I think traders should continue to hold on to the long position with a stop loss of 3,087.
So, yes, looking strong and if market continues to be like this or see some bounce back from here, then this will definitely do very well from the auto space. So, one of the good setup we can say from the auto space and 3,087 should be the stop loss for short-term traders.
