Highlights
- Nifty lacks strong support below 22,300; volatility may trigger sharp 500-point correction
- Bank Nifty weak below 52,000; support seen near 48,000 amid bearish sentiment
- Caution on IT, metals; power sector stable, crude oil shows strongest momentum
In an exclusive interaction with ET Now, Rupak De, Senior Technical Analyst at LKP Securities, shared a cautious outlook on the markets, highlighting key levels and sectoral trends. He flagged the absence of strong support for Nifty until 22,300, warning of a sharp correction if breached, while pegging resistance at 22,500 amid rising volatility. Bank Nifty, he noted, remains weak below 52,000 despite support near 48,000. Rupak also outlined stock-specific calls, advised caution on IT and metals and identified the power sector as relatively stable, with crude oil emerging as the only asset showing technical strength.
Market Outlook and Key Levels
Rupak indicates there is no significant support until 22,300. If this breaks, a sharp 500-point correction could occur. Strong resistance is noted at 22,500. High volatility is expected due to the upcoming F&O expiry, with a large straddle formation suggesting a significant move in the next trading session.
Rupak said, “a lot will depend on how the situation between Iran and the US unfolds, which could drive significant movement in the next trading session. We are also seeing a large straddle formation at the Nifty ATM level, with a spread of around 400 points, which is higher than usual. Additionally, with no weekly expiry, the next session is likely to be a crucial one, where both long and short positions could get squared off.”
Bank Nifty Analysis
Rupak expected a strong support for Bank Nifty at 48,000 (200-week moving average) and resistance at 52,000.
He said, “Nifty Bank has also given a significant breakdown. Earlier, it was showing strong outperformance compared to the Nifty, but after falling below its key moving average, it has continued to decline.”
“Currently, it has an important support around 48,000, where the 200-week moving averages is placed. In the short term, the outlook appears quite volatile for Bank Nifty. On the upside, resistance is seen around 52,000. As long as it remains below this level, sellers are likely to have the upper hand in the coming sessions,” Rupak added.
Stock-Specific Recommendations
Here are stock recommendations by Rupak De:
Sell: Hindalco at Rs 840 for a target of Rs 810 (Stop loss: Rs 860).
Buy: Power Grid at Rs 302 for a target of Rs 317 (Stop loss: Rs 290).
Market view point
On the IT sector, Rupak said, “I would prefer to remain cautious on the IT sector. It has seen a significant breakdown below its previous swing low. As long as it stays below 31,500, I would avoid it for long-term positions.”
Talking about metals index, Rupak said, “The metal index has reached the upper band of its rising channel on the monthly timeframe, so a correction was expected. That correction is now underway, and in the short to near term, the downside may extend further. It could be a good idea to take short positions in select metal stocks at current levels. However, if the metal index declines towards 9,200, that could present a good opportunity to re-enter long positions.”
On the positive side, Rupak highlighted power sector as a relatively safer defensive play, though not expected to provide huge alpha returns. He stated that crude oil is showing a ‘golden crossover’ on its daily chart, making it look positive compared to other asset classes.
“The power sector could offer some degree of comfort, but overall market sentiment remains weak. Most investors are unlikely to find stability across asset classes — be it gold, the dollar, or equities. Crude oil appears to be the only asset showing strength, supported by a golden crossover on its daily chart. Apart from that, most asset classes are not looking favourable. While power sector stocks in India may provide slight comfort, it may not be sufficient to generate meaningful alpha for portfolios,” said Rupak.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
