BackExpert view: Nifty 50's potential upward move above 23,300 could lead towards 23,800, says Kapil Shah of Emkay Global
Expert view: Nifty 50's structural integrity remains strong, with potential upward movement towards 23,800. Nifty Next 50 outperforms due to capital goods stocks. IT sector offers accumulation opportunities amidst positive market outlook, said Kapil Shah, Technical Analyst of Emkay Global.
PremiumExpert view: Following the Lok Sabha election 2024 results, the D-Street witnessed a bloodbath on Tuesday, June 4. However, in the previous three sessions, domestic benchmark indices have extended advances into the third straight session, ending at new closing highs on Friday, June 7.
Despite a 6% loss on June 4, the domestic benchmark indices are up with modest gains in June thus far. The Nifty 50 index rose roughly 3.4% in the first week of June. As volatility remains high and is expected to continue in the near term, Kapil Shah, Technical Analyst, Emkay Global, and Technical Analysis Trainer at Finlearn Academy, discusses Nifty 50 trends going forward, the broader market outlook, and some sectors and stocks to keep an eye on in an interview with Mint.
Also Read: Nifty 50 continues its wild swings; how should investors play this volatility?
Edited excerpts:
How do investors approach the market right now? Could you tell us roughly the direction of the market from here on out, based on Tuesday's massive crash? Do you believe the bottom has been reached?
The structural integrity of the Nifty 50 remains robust, although there have been noted changes in texture. The Nifty 50 Index currently resides at the previous peak of 23,300, representing a level of mild resistance. A potential upward movement beyond 23,300 could signify a further progression towards 23,800. In the short term, it is expected that the bullish trend will persist above 22,800, while in the midterm, this trend is anticipated above 22,300, and in the long term, it should be upheld above 21,800.
Do you believe the Nifty 50 will rebound from its present levels on Friday to reach 24,000 or set a new high following the formation of a new government?
The index has recently broken out of a rectangle pattern, with the pattern target set at the 23,800 level. Sustaining levels above 23,300 will further fortify the Nifty 50.
The Nifty Next 50 has risen by 4.05% in May 2024 and 60.59% in the past year. Why is the Nifty Next 50 outperforming the Nifty 50? Are there any specific reasons?
It is essential to examine the composition of both the Nifty 50 and Nifty Next 50 Index. Heavyweight stocks such as HDFC Bank, Reliance, ICICI Bank, and Infosys, which are constituents of the Nifty 50, have demonstrated lackluster performance. Conversely, the capital goods stocks have exhibited remarkable performance, contributing 15% to the Nifty Next 50 Index. Consequently, a robust outperformance has been witnessed in the Nifty Next 50.
As a result of that, we have witnessed a strong outperformance in the Nifty next 50.
What is the broader market outlook at this point? What are the opportunities in this space?
Prominent large-cap stocks and leading mid-cap companies are anticipated to perform favourably in the near future. The information technology (IT) sector presents an attractive opportunity for accumulation with a substantial margin of safety.
Fast-moving consumer goods (FMCG) stocks rebounded in June. Will this momentum be sustained, or will the trend reverse?
The FMCG index has achieved an all-time high and exhibits a bullish continuation formation on the technical chart. An intermediate correction within the range of 56,000 to 55,000 presents an opportunity for favourable investment. Notably, companies in the beverage sector within the FMCG space are displaying strong movement.
Are Public Sector Undertaking (PSU) stocks trading at reasonable or stretched valuations?
Numerous PSU stocks have undergone a substantial and vertical ascent. A time-wise correction is a plausible scenario.
What are the breakout stocks to watch out for? How one should look at these stocks the in upcoming session?
Stocks like Tech Mahindra, IT ETF (exchange traded fund), Bayer CropScience, Granules India, Mahanagar Gas, Jyothy Laboratories and General Insurance Corporation of India are looking in strong bullish momentum.
Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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