"We can expect Nifty50 to move to life time high levels near 20,100 post which there can be short term retracement of the recent rally," Ashish Kyal, CMT, Founder & CEO of Waves Strategy Advisors says in an interview to Moneycontrol.
"Unless, the Nifty50 sees a close below previous weekly low which is now at 19,430 use dips to buy and keep riding on upside," he advises.
The Chartered Market Technician with vast experience in capital markets and the Elliott Wave expert advises Godrej Properties and Affle India for September, which can return 10 percent each.
Q: Will the Nifty50 rally extend beyond 20,500 in September?
Nifty has showed smart rally form the lows of 19,230 levels made on August 31, 2023. Prices rallied by more than 600 points in just six days, along with broader participation seen from the midcap and smallcap sector. This is a healthy sign. We can expect prices to move to the Gann levels of 19,952 followed by 20,100. It will be difficult to touch 20,500 in September itself but markets are known for surprises.
We can expect prices to move to life-time highs near 20,100, post which there can be short-term retracement of the recent rally. On a weekly basis, after six consecutive weeks of correction, prices in the prior week again managed to close above the previous candle high which has turned the medium term trend again on an upside. This is the simplest way of trend following.
Also read: Busy week ahead for primary market with 6 IPOs, 5 listings to hit the Street
So, unless we see close back below previous weekly low which is now at 19,430 use dips to buy and keep riding on upside. Form Elliott wave perspective we are currently in wave 5 giving the target near 20,100 levels.
Q: Your take on the Bank Nifty....
Bank Nifty has been late in the rally this time and started showing upward thrust only form September 7, 2023. Over the short term, prices have given a breakout on upside from the neckline of inverted Head & Shoulder pattern, thereby giving the near-term target of 45,700 levels.
We can expect some consolidation, post which the upward trend can resume towards the lifetime high levels of 46,400. Overall, banking index is looking strong with the positive trend to continue as long as the support near 44,300 remains intact.
Also read: Adani hikes stake in two group companies
PSU Banking index is actually outperforming and PSU stocks can continue to outperform in September. Only a weakness in PSU banking stock will be a sign of concern but until then it is best to use any dips to buy the index.
Q: Nifty IT has broken its horizontal resistance trendline on the weekly basis in the passing week. So, do you see the index gradually moving towards 35,000 and can the index achieve its previous record high in the current year itself?
We have been bullish on Nifty IT index over the entire past month and have mentioned the same in our earlier interview. Nifty IT largecap stocks have been a laggard, whereas IT midcap stocks have given stellar returns. It is time that largecap IT stocks might start catching on upside.
Nifty IT sector has given a strong breakout after forming a triple bottom pattern on weekly basis, thereby opening the target level of 36,800 levels. The index is currently trading near 32,450, and we still have a possibility of 10 percent to 15 percent of up move from here on.
The sector might have completed its wave 2 lower and we might be headed on upside in form of wave 3. It is best to keep accumulating IT largecap stocks on every dip as we expect the index to move to 35,000 followed by 36,800 levels.
Q: Is the IRFC looking overbought now?
IRFC rallied by more than 50 percent in just six days of time. The stock is definitely overbought but this does not mean one has to move out from here. An overbought condition indicates that the stock can consolidate or show dip over the short term.
But that can be used as a buying opportunity. As long as the lows near Rs 67 is intact, one can use dips to buy as that will relieve the overbought zone.
Existing longs can follow trailing stop-loss method and keep riding the trend unless there is close below prior day low. This is a simple way of trend following.
Q: Do you think Cochin Shipyard uptrend is looking like a Cup and Handle pattern breakout rally?
Cochin Shipyard already achieved the target of Cup & Handle pattern and has in fact overshot it by a huge percentage on upside. This stock has shown similar price action to that of IRFC with an up move of nearly 30 percent in just two days' time.
The trend for stock is positive but it is overbought and it is best to avoid creating fresh longs unless we start seeing consolidation pattern formation. Support for the stock is near Rs 1,050 levels.
Q: Two picks on your radar that can give double-digit return by September-end?
Godrej Properties and Affle India stocks are showing strong breakout. Godrej properties, currently trading at Rs 1,693, can move to the levels of Rs 1,870, which is more than 10 percent possibility as long as support near Rs 1,600 is intact. Affle India, currently trading at Rs 1,159, has potential to go up to Rs 1,275 as long as Rs 1,100 is intact.
Q: Are the Nifty Midcap and Smallcap indices looking overbought now?
Both Nifty Midcap and Smallcap have shown spectacular rally on upside over the past many weeks. In our earlier interview as well, we have talked about bullish bet on this sector and stocks, which has played out extremely well.
For now, it is best to keep riding the trend. The indicators are overbought but that does not mean the rally has to end. We can expect consolidation or minor retracement but that will be an opportunity to enter into the stocks that have shown leadership role during the rise.
We can see everyday a few sets of stocks are hitting lifetime highs, which is a healthy sign. There is no negative divergence yet on indicators, thereby keeping the tone buy on dips for both Midcap and Smallcap indices.
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.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
