Edited excerpts from a chat:
Nifty has seen two successive weeks of negative endings amid lack of any positive fundamental triggers to take the market higher. How do you look at this consolidation mode with a downside bias from the technical lens?
Following a week-long consolidation and a breakdown on Friday, only 24% of Nifty50 constituents ended up closing above their respective 10-day SMAs. This is the lowest number since early June. Parabolic SAR has also given a sell signal, which is the first time since late June.
We have brought in the 200-day SMA in our calculations, which at 24,100 is now over 4% away from present levels. Incidentally, 46% of both Nifty50 and Nifty500 constituents are now trading below their respective 200-day SMA. Our hopes are now at 24,920, which is near the 50-day SMA to provide a window for reversal.
IT stocks were among the worst hit last week as investors don’t expect much from the Q1 earnings season as far as largecap IT stocks are concerned. Do you see chances of more downside ahead?
The Nifty IT index is showing signs of underlying weakness, highlighted by a prominent bearish Marubozu candle on the weekly chart. This suggests strong selling pressure and a lack of buying interest. The weekly MACD histogram has formed a reversal candle, reinforcing the bearish sentiment. From a derivatives perspective, most constituent stocks have witnessed short additions on both daily and weekly timeframes, indicating sustained bearish positioning. This could potentially drag the index down towards the 37,050 level in the near term. However, on extremely short-term periodicities, the index is approaching oversold territory.
Key stocks like Infosys, HCL Technologies, and Tech Mahindra are showing signs of a technical rebound, which could lift the index temporarily towards the 38,000 mark early next week. That said, any such recovery is likely to be met with renewed selling pressure. A sell on rise strategy may be employed.
FMCG stocks were on a positive trajectory given growth seen in their Q1 business updates. How do you read the momentum building in the days ahead?
Nifty FMCG index has been trading within a descending trend channel since April. Earlier this week, it briefly broke above the channel resistance near 55,960 but failed to sustain the breakout, closing below both the resistance and the Supertrend level. This failed breakout adds to the uncertainty surrounding the continuation of the upward move.
On the hourly chart, the index has been moving within a rising channel since the start of the week, with immediate support seen around the 55,780–55,760 zone. A pullback attempt from this region is possible. However, a close below 55,760 would be a sign of caution, potentially opening the door for a decline toward the 55,300–55,200 range.
From a derivatives standpoint, short positions have outweighed long additions on both daily and weekly timeframes, indicating waning bullish momentum.
While Hindustan Unilever was the top contributor to this week’s gains, most heavyweights—such as ITC, Nestlé India, Varun Beverages, Britannia, Tata Consumer, Godrej Consumer, and United Spirits, which collectively account for around 60% of the index—witnessed profit booking and remain under pressure. Looking ahead, the index may remain neutral to weak in the coming week. However, relatively resilient names like Hindustan Unilever and Dabur could help cushion deeper declines.
BSE shares were among the worst performing ones within Nifty500 and ended the week down 10% amid negative news flow around derivatives. How would you go about trading the stock now?
BSE has declined over 22% from the record peak, and last fortnight’s sustained downtrend has given the feeling that the stock has entered a full fledged bear trend. However, with Friday’s close, BSE is now near 38% fibo of the March to June rise, even as oscillators are also showing signals of exhaustion in downtrend. This encourages us to plan for a sideways move next week. Signals towards upswings are not forthcoming yet, but we will know, once a consolidation gains dominance over the declining spree.
Give us your top ideas for the week ahead.
BHARTI HEXA (CMP:1,791)
View – Buy
Target – 1,930
Stop loss – 1,729
Bharti Hexacom has been trading within an upward-sloping Widening Wedge pattern since May. After hitting a fresh all-time high earlier this month, the stock has entered a phase of profit booking. Over the past three sessions, the formation of multiple Doji candles near the lower boundary of the wedge suggests indecision and potential attempts to stabilize or rebound from current levels.
On the daily chart, the MACD histogram is showing early signs of exhaustion, hinting at a possible reversal in momentum. If the stock manages to hold above the wedge support, a move toward the 1,930 level could unfold over the next few weeks.
Traders holding long positions should consider placing a protective stop-loss below 1,729 to manage downside risk effectively.
ASTERDM (CMP:607)
View – Buy
Target – 630
Stop loss – 589
While the stock remains in a broader uptrend, it experienced some profit booking last week. Despite this, it formed an inside bar Doji candle on Friday, suggesting a potential attempt to reverse course. Notably, this reversal zone aligns with the 61.8% Fibonacci retracement level, measured from the June low to the July high—adding strength to the bullish setup.
Given these technical cues, the stock is likely to move toward the 630 level in the near term. Traders holding long positions should consider placing a stop-loss below 589 to safeguard against downside risk.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
