Such has been the consolidation in the market that the Nifty moves across the last two F&O series’ has not even been 0.5% on either side. The Nifty range remains the same. 23,800 on the downside and 24,200 – 24,250 on the upside.
Even if the Nifty has not had a breakout so far, the bulls would take heart from the fact that they have managed to defend lower levels, particularly the 23,850 – 23,900 zone. Buying interest has emerged every time the index has dipped towards those levels.
The challenge for the bulls, going into Thursday’s Sensex weekly expiry, would be to generate buying interest or sustain it within the 24,150 – 24,200 zone, where supply has emerged during every recent upmove towards that range.
Ahead of their respective business updates for the quarter, FMCG companies have started to take a leg up, lending support to the market and providing some support to the banking names, who have been doing the heavy lifting all along, first to ensure that the Nifty does not break key levels on the downside, and also to ensure that the index surpasses and sustains above key levels on the upside.
IT though, is showing no signs of any respite. Even after the worst first half of a calendar year in the last 25 years, the IT stocks continued to sell-off in mid-week trade as well, extending its losses for the week, and for the year as well. That remains the single major concern for the market, at least in the near-term, as these IT companies will soon kickstart the earnings season from next week.
“In terms of valuations, I think we have not seen such attractive valuations in IT large-caps before. These stocks are now trading at 13–14 times earnings. But you need to understand that this is not a value market. We have to watch management commentary going forward. Otherwise, we should only pick those companies that are moving more aggressively into artificial intelligence. I think the day will come when, based on valuations and earnings growth driven by AI, we can start assigning more value to these companies.”, Amit Gupta of Motilal Oswal Private Wealth told CNBC-TV18 on Wednesday.
Is the Nifty A Buy Or Sell?
Rupak De of LKP Securities said that despite the sideways moves shown by the index, the short-term trend remains positive. “Going forward, the bullish bias is likely to remain intact as long as the Nifty holds above the 23,800 support level. On the higher side, the index may continue its slow but steady upward trajectory, with the potential to move towards 24,200 and higher over the near term,” he added.
Sudeep Shah of SBI Securities believes that the immediate resistance for the Nifty is now between 24,130 – 24,150 levels. Any sustainable move above these levels could result in extending the pullback towards the 24,300 zone, followed by 24,450 on the upside. Meaningful support on the downside is now at 23,870 – 23,850.
Where Is The Nifty Bank Headed?
The Nifty Bank has a stronger setup in comparison to the Nifty and even though it remains in a range as well, it is reversing its underperformance from earlier in the week and is also moving back to the higher end of the range, having closed above the mark of 58,000 yet again. The 58,500 level remains the one to watch on the upside.
Dhupesh Dhameja of SAMCO Securities said that the immediate support zone for the Nifty Bank is between 57,450 and 57,500. On the upside, a sustained move above 58,600 – 58,700 levels will be essential to confirm a breakout, and could also open doors for a further upmove towards the 59,500 – 60,000 levels. Until then, the consolidation around the 58,000 mark is likely to continue, he added.
