Before 20,000 a retreat in store for Nifty: Analysts

There could be some near-term weakness in the market after the Nifty nearly touched the 20,000 milestone last week following a run-up that resulted in equities becoming overbought. With the first-quarter results of some large companies disappointing, analysts expect some profit booking this week. Coromandel, Gail, IDFC First Bank, Marico, HUL, Federal Bank, FDC, Firstsource, Piramal Enterprises, Sun Pharma and Sunteck are some stocks that formed positive breakouts, according to analysts.

AJIT MISHRA
SVP-RESEARCH, RELIGARE BROKING

Where is Nifty headed?
Nifty has almost tested the new milestone of 20,000 and gained over 7% in the last four weeks, which has pushed the oscillators into the overbought zone. The sharp dip in IT has derailed its momentum, and we could see a breather in auto and FMCG. It would be healthy to see some consolidation before making further progress. In case of any dip, we believe Nifty would respect the 19,300-19,500 zone, while any attempt to surpass the 20,000-20,200 zone may attract profit booking.

What should investors do?
As we are eyeing consolidation, participants should focus on position management. Banking, financials, pharma and metal look promising for further up move. Based on technical parameters, Coromandel, Gail, Grasim, IDFC First Bank, and Marico are well-placed for an up move. Jubilant FoodWorks, UPL and Voltas may continue to reel under pressure. Coromandel has formed a fresh buying pivot while holding above the moving averages. Gail is set for a breakout from a broader consolidation range. Grasim formed a fresh breakout from a triangle pattern. IDFC First is on the verge of a multi-year breakout. Marico is likely to resume an uptrend.

KAPIL SHAH
TECHNICAL ANALYST, EMKAY GLOBAL FINANCIAL SERVICES

Where is Nifty headed?
The index shied away from the 20,000 level by a few points before heavy selling on Friday due to disappointing results by IT companies. Nifty has risen for 18 consecutive weeks with a gain of 18% at a stretch. It has formed a shooting star pattern on the weekly chart and shows buying climax symptoms, but it must breach the support level to validate its implication. Nifty has immediate support at the 19,700 level. The index can slide from 19,500 to 19,300 this week if it moves below the 19,700 level. On the higher side, it will have stiff resistance of 19,850, followed by a 20,000 level.

What should investors do?
Banking, pharma, and a few oil & gas stocks did well the previous week while selling was observed in IT, cement and chemical stocks. Sun Pharma Advanced Research is a potential stock to watch out for this week. It offers a good buy opportunity at the current level with a stop loss of Rs 215 and an upside potential of Rs 255-260. HUL entered the support band and touched the long-term moving average. It is a contra bet but offers a good risk-reward ratio. With a stop loss of Rs 2,560, the stock can have an upside potential of Rs 2,700.

VIRAJ VYAS
TECHNICAL & DERIVATIVES ANALYST, ASHIKA STOCK BROKING

Where is Nifty headed?
The Nifty continued its 15- week streak of new highs and record closing highs, rising 0.92% last week. Although experiencing some profit-booking, the strong uptrend remains intact, while concerns over overbought conditions persist due to ongoing results season and major oscillators signalling overbought levels. The index retains a positive medium-term outlook as long as it stays above the crucial 19,400 level, which is a 21-day exponential moving average, while a near-term psychological resistance stands at the 20,000 mark. Vigilance and strategic positioning are key during occasional profit-taking and cautious investor sentiment as the index charts its course to greater heights.

What should investors do?
The broader market displays a robust underlying strength, indicating the likelihood of ongoing stock-specific rallies and sectoral solid rotation. Notably, stocks like Federal Bank, Computer Age Management Services, FDC, Firstsource Solutions, Piramal Enterprises, Sun Pharma and Sunteck demonstrate strength and present a favourable risk-reward setup for long positions, while UPL, Atul and SRF present favourable short setups.