According to Ashish Kyal, the Founder of Wavesstrategy.com, the Pharma index is currently trading at around 15,200 levels and may soon surpass the 16,000 mark, as stated in an interview with Moneycontrol.
He advised any dips in pharma stocks can be used as an opportunity to buy as IT and Pharma space can be the flavour over the coming weeks and months.
In the Nifty IT, prices are currently trading at 30,400 levels and a break above 31,000 can start a multi-month up move in this sector for targets of 37,000 levels, the Chartered Market Technician with vast experience in the capital markets says.
Indian currency INR also can start depreciating against USD which can further support the rally in IT stocks, he believes.
Do you think we are done with the correction in the Nifty50 or do you expect the index to break 19,000 in August?
Nifty started moving up since March 29, 2023 from the lows of 16,940 levels. It rallied for consecutive 18 weeks without breaking below the low of the prior week on a closing basis touching lifetime highs at 19,991 on July 20, 2023. This is a rally of more than 3,000 points in less than 4 months. It is a healthy sign to see profit booking or correction after such a sharp rise so that the next rally is accompanied by broader participation.
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Last week, Nifty closed below the previous candle lows, indicating a potential short-term profit booking. The low point reached was at 19,296 levels, and if this level is breached, it may lead to a move towards 18,838. Currently, Nifty is at a crucial point.
On the upside, 19,800 is an immediate hurdle and we can expect a rangebound move between 19,290 – 19,800 levels this week before any directional move is seen. The break of this range will set the trend in that direction.
It is best during such times to trade light and form an Options strategy for rangebound or consolidation movement. BSE Smallcap and Midcap indexes have not shown much correction thereby suggesting the uptrend is not yet over.
In Nifty, we can expect a slowdown in momentum and after a short-term correction up move will resume. If prices break below 19,290 levels then we can expect to move to the Gann level of 18,838 whereas over the short term moving above 19,600 will open the target for 19,800 levels.
Bank Nifty also behaved in similar fashion. Do you see the possibility of index breaking 44,000 mark soon?
Bank Nifty touched lifetime highs at 46,369 on July 21, 2023, and from there corrected to the lows of 44,279 made on August 3, 2023. This is a little over 2,000 points of correction we have seen in this index. Price action support areas are at the 44,200 level which is an important support. This level is also an essential support of Bollinger Bands on a daily time frame.
Price action from here is going to be important. If Bank Nifty manages to protect 44,200 levels then we expect a move back to the 45,500 levels. Over the near term prices can consolidate within the 45,600 – 44,200 range.
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Banking stocks SBI, ICICI Bank, and Axis Bank have shown sharp correction over the past few days and short-term pullback is possible in these stocks. So Bank Nifty might not break 44,000 soon but we might first see a break above 45,000 level before further profit booking.
Nifty IT failed to sustain above 31,000 levels in a recent earnings-led correction, but it has seen consolidation above the 50-week EMA for the last five weeks. Is it raising hope for a significant rally in the coming weeks?
The Nifty IT index showed sharp correction post-Infosys guidance which resulted in a short-term down move. However, a few IT stocks like Wipro are forming classic Inverted Head & Shoulder patterns on a weekly time frame, which is a bottoming pattern.
As discussed in a prior interview as well Nifty IT index is moving in a range for exactly a year now and we are expecting a positive breakout soon in this space.
Prices are currently trading at 30,400 levels and breaking above 31,000 can start a multi-month up move in this sector for targets of 37,000 levels. Indian currency INR also can start depreciating against USD which can further support the rally in IT stocks.
Do you think the Indian Railway Finance Corporation is done with the rally which we have seen after several months of consolidation?
IRFC has shown a sharp rally on the upside in the form of Elliott Wave 3rd which is the strongest leg and moved from Rs 32 levels and touched the highs of Rs 48.30 on August 4, 2023. This up move is only wave 3 and post that we will see consolidation in the form of wave 4 before the up move resumes again in the form of wave 5.
An impulsive wave consists of 5 waves and the rally in IRFC is not yet over. So there is more room for upside after short-term correction in the form of wave 4. On downside support for the stock is near Rs 40.25 which is a 50 percent retracement of the prior rise. Dips can be used to buy this stock for a trend back towards Rs 49 levels.
Do you expect another leg of significant down move in Godrej Properties after a loss of 12 percent in a current week?
Godrej Properties showed a sharp cut in the last few days from the highs of Rs 1,765. The stock is currently trading near Rs 1,535 and important support is placed at Rs 1,479. A sharp rise followed by a sharp fall can result in sideways action in the form of a Triangle pattern.
So after losing 12 percent, we can expect short-term consolidation in this stock with support at Rs 1,479 and an upside hurdle near Rs 1,680.
What is your take on the Nifty Pharma which hit a fresh record high for last two weeks?
We have been discussing about Nifty Pharma sector in earlier interviews and mentioned that this is going to be outperforming index for coming months.
Pharma sector has been under correction for nearly 8 years after topping out in April 2015. This sector has now given a strong breakout and started to move up in form of wave 3. This index is currently trading near 15,200 levels and can soon cross above 16,000 mark as well. Any dips in pharma stocks can be used as an opportunity to buy as IT and Pharma space can be the flavour over coming weeks and months.
Follow Ashish Kyal on Twitter - @kyalashish
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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