Anand James, Chief Market Strategist at Geojit Financial Services, warns that Nifty’s late-week profit booking has left the index vulnerable. Identifying 23,600 as the critical pivot line in the sand, James notes that holding above it keeps buying hopes alive, but a breakdown will shift targets down to 22,800 amid broader market exhaustion.
Edited excerpts from a chat:
Nifty gave up gains made in the previous two weeks to end over 2% lower but showed support at 23,260 level. How would you trade the index in the week ahead?
The bounce off key supports found enough momentum to tip the scales from fear of collapse to hopes of seeing above 25,000. However, the rapid ascent through Thursday and Friday rendered the trend vulnerable to profit booking, which was visible in the second half of the day. In fact, the 23,850-23,900 region, from whose vicinity the turn lower unfolded, was indeed an obstacle that would have appeared too steep a wall to climb right away.
While we view the sharpness of Friday’s turn with caution, the 23,600 region will serve as an important pivot, as long as above which hopes of a renewed buying attempt could be seen. That said, we do not have an upside objective for now until 23,900 is conquered, but we will be forced to bring 22,800 back into the radar should we begin to trade below 23,600.
Nifty IT index tumbled further 6%. Do you see chances of any relief rally?
Derivative positioning reflects a mixed undertone. In the near out-of-the-money strikes, puts have seen fresh short build-up, while calls have witnessed long additions, signalling expectations of a possible pullback. At the same time, nearly 50% of IT stocks in the futures segment recorded short build-up both on Friday and on a week-on-week basis. Additionally, around 30% of stocks are showing an open interest put-call ratio (PCR) below 0.5, indicating the potential for a near-term pullback.
Meanwhile, charts show oscillators in overbought conditions, with some showing positive divergence. Friday’s rise was encouraging, but not sufficient to signal a reversal, especially since directional indicators continue to indicate strong downside momentum. Friday’s close points to an inverted hammer formation, but we are inclined to weigh the inside bar close and see possibilities of an upside attempt in the coming week.
Kaynes was the top loser in the week and fell 27%. What are the charts indicating, buy the dip or more pain ahead?
Despite the doji at the end of steep losses in the last few days, momentum indicators and standard deviation studies suggest that more pain is in store for the stock. We now have a close near the year’s low seen on 27 January, but the preferred view expects a breakdown unless recovery attempts succeed in getting back above 3,412.
HFCL shares have surprised by more than doubling in just 3 months. What would you recommend for those who missed the rally?
Oscillators now appear exhausted, and those looking to enter should be cautious, with a stop loss near 145-142. Turbulence is expected early next week, but if this region holds firm, 167 could be expected. The next good support below is seen in the 127-122 region.
Top trading ideas for the week
KPRMILL (LTP: 923)
View: Buy
Target: 980
Stop loss: 895
KPRMILL is showing signs of a constructive reversal on the daily chart, supported by a strong bullish engulfing candle formed near the key support zone around 900. This pattern reflects demand absorption after the recent pullback, suggesting buyers are reasserting control.
Momentum indicators are aligning with this view. The MACD histogram is showing exhaustion on the downside, hinting at a potential bullish crossover ahead. RSI has also rebounded from mid-range levels, indicating improving strength without being overbought, leaving room for further upside.
Price is currently holding above the pivot zone around 900 and reclaiming short-term moving support, which strengthens the near-term bullish structure. A sustained move above 930-940 could accelerate momentum towards the next resistance band near 980.
REFEX (LTP: 277)
View: Buy
Target: 310
Stop loss: 266
Refex Industries is displaying a strong bullish turnaround across multiple timeframes, reinforcing a positive continuation outlook. On the daily chart, the stock has delivered a decisive breakout above horizontal resistance near the 270-275 zone, supported by rising volumes.
Momentum indicators are aligning constructively. The MACD is on the verge of a bullish crossover, while the histogram has already begun to tick higher, suggesting strengthening upside momentum. RSI remains firm in the higher range, reflecting sustained strength without immediate signs of exhaustion.
On the weekly timeframe, a Supertrend breakout adds further conviction to the bullish bias, marking a broader trend reversal after a prolonged downtrend. This improves the probability of sustained upside towards 310 in the near term.
