Edited excerpts from the conversation:
The Nifty ended around 1% lower last week as the index of IT stocks fell. How do you see the market shape in the first week of March?
Nifty ended the week on a negative note due to the previous day’s fall, when it fell below the 200 DMA, confirming the negative sentiment that may persist for a few days. The week started with a sell-off in IT stocks, but selling pressure extended to heavyweights Reliance and Realty Pack. The final nail in the coffin came from a strong sector, the banks. Bank Nifty fell below the 21 EMA for the first time in many days, fostering a cautious sentiment. During March, I expect the stage to be set for a weaker market, at least for the first half of the month. Support at the lower end is seen at 24,500. At the higher end, resistance is placed at 25,500, above which sentiment may improve slightly.
In the last 3 days, Nifty IT tried to rise. Do you think it’s a dead cat bounce or a sustained rise? Is it too early to say that IT stocks are over?
The last three-day bounce in the IT sector was weak, limited, and unreliable. As the index falls below the previous swing low, more investors liquidate their long positions, because risk-averse sentiment is in place, not the other way around. I believe as long as it stays below 31,500, the index is likely to remain bullish. At the lower end, we may see another round of selling in place, with the index falling by another 8-10%.
In the last 3 trading sessions, have we seen shorts in IT stocks?
I don’t feel like that; In fact, many people sold on the bull, causing it to fall from a three-day high.
Metal works well. What do the charts tell you?
Metals did really well, ending the month as gainers, but momentum seemed to be lacking, as a close to the upper band of the emerging channel led to a bearish move. I believe there is a strong possibility of further correction in the space. However, the fundamental difference between metals and IT is that metals are still bought on dips, but the same cannot be said for IT.
Tejas was the biggest gainer in the week. How do you trade stocks now?
Stocks typically move up to give some sort of rally and then pull back from the previous low, which has been a phenomenon for more than a year. However, this time it looks a little different, as the price hike was supported by significantly higher volume. Tracking the purchase on the second day is also a validating factor. The stock should be sold with a stop loss of 400, while at the high end, it may move towards 550.
Give us your best ideas of the week.
Buy CHENNAIPETRO 962 | SL 929 | TGT 1010
The stock has given a nice upward breakout, leading to an eventual increase in positive sentiment, as more buyers are now willing to pay higher prices for the same stock. The 21 EMA and 50 DMA are in a high crossover, indicating a positive trend. RSI is in a high crossover. In the short term, the trend is likely to support the bulls, possibly reaching 1010, while support is held at 929.
Buy SAILIFE 998 | SL 964 | TGT 1040
The stock has given a previous swing high breakout, leading to an increase in positive sentiment. The price continues above the 21 EMA and 50 DMA, indicating a positive trend. RSI is in a high crossover. In the short term, the trend is likely to support the bulls, possibly reaching 1040, while support is held at 964.
Sell AXISBANK 1383 | SL 1416 | TGT 1330
The stock has suggested a consolidation breakout, lifting the bearish outlook on the stock. On the hourly chart, the stock price has broken below the 21 EMA, suggesting the formation of a negative trend. The hourly RSI is in a bearish crossover. On the lower end, it may fall to 1330, while resistance is held at 1416, above which sentiment may improve.
