By Anand James
Though Monday’s opening gains could not be sustained, and upsides kept getting capped through the rest of the week, there was a marked departure from the previous week’s sell-on-rallies mode with the market witnessing a buy-on-dips approach. As a result, though benchmark indices may not have much to show on the board, a broad market recovery appears to be in play. Meanwhile, 83% of NSE 500 stocks closed above their respective 10-day SMA on Friday, when compared to just 35% on the previous Friday, and more than 63% of the constituent stocks bounced at least 1% from Friday’s lows, confirming strength across the board.
Nifty appears rejuvenated after last week’s consolidation
Last week, while turning bullish and setting a target of 25262, we were clear of the prospects of a turn lower prior to that. The recovery post expiry, from the 23900 vicinity is suggestive of regrouping of bulls. We are encouraged to eye 24700, the 50-day SMA, as the near-term objective. Alternatively, the inability to float above 24230 early in the week, could see Nifty drifting lower again, hoping for 23700 to attract bargain buying again and a regrouping of bulls. Meanwhile, Bank Nifty appears more travel weary and exhausted, prompting us to be cautious on approach to 52500. However, if we get a time correction with dips not extending past 51400, a stronger upside could unfold with upside objectives stretched to 53700.
Sectoral Cues
Pharma to gain strength
Nifty Pharma Index has been in a pullback mode since October 2024 and seems to have formed a base around 21500 and a reversal is underway on the weekly scale. The Stochastic Momentum histogram has shown signs of exhaustion at lower levels on the weekly scale and the stock has bounced off the Supertrend level of 21500 hinting at the continuation of the ongoing reversal. Expect the current reversal to push the index towards 22750-22950 in the near term. Aurobindo Pharma, Sun Pharma, Cipla, Zyduslife, Divi’s Lab, Torrent Pharma and Alkem Lab are expected to lead the index.
Reversal seen in Oil & Gas
The Nifty Oil & Gas index has been on a decline since August 2024 and has seen a Morning Star candlestick pattern in the weekly time frame indicating the start of a reversal. The Stochastic Momentum histogram has shown signs of exhaustion at lower levels on the weekly scale and stock is close to breaking above the Supertrend level in the daily time frame.
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