Edited excerpts from a chat:
FII shorts in Nifty futures have been a worrying trend. How has the data changed after the Budget?Since Budget, FII’s longs in the index future segment have been on a rising trend, while the shorts have been on a declining trend. This pattern was rarely seen in the last six months, and assumes importance hinting at a potential towards FIIs changing their unilaterally bearish stance. At 43462 contracts, their longs in the index future segment is the highest since late January, and sub 2 lakh contracts level on the short side held by FIIS now, was last seen in the early January period. The consequent long short ratio of 18 levels was last seen on 1st of December, but at that point, the longs were just 26k, and shorts were just 1.1 lakh. In other words, FIIs are still short heavy, and the 3% boosting of shorts on Friday suggest that we need more days of reduction in shorts or a larger reduction in size, to establish it as a trend, and project a rise in Nifty.The news heavy week saw Nifty ending around 1.5% higher. What are the charts indicating in terms of how sustainable the rally can be this month and whether the momentum can take us to record high once again?Despite the positive weekly close, it must not be forgotten that Nifty failed to sustain the peaks seen on 3rd February, which saw an up gapped opening. Also, on Friday, we came close to seeing Nifty filling the break away gap. This is certainly an indication that momentum has weakened, and we have most likely slipped on to a range trading bias. That said, that Nifty did not stretch all the way to 25450, in order to fill the gap, and that a close in the vicinity of 25700 was seen in the last three days, suggesting that buying interest is still around. Alternatively, a repeat fall into the 25496-450 territory should push the trend into a sideways mode signalled already or announce the re-dominance of bears.
IT stocks hogged limelight for the wrong reasons. Is the dip here a buy or do you see more pain ahead?Following the recent selloff, the Nifty IT index is likely to look for support around the SuperTrend level near 35,100, which also aligns with a rising trendline. However, the emergence of a bearish crossover on the weekly MACD is weighing on near-term upside potential. Failure to sustain above the 35,100–35,000 zone could lead to further downside toward 34,320 (200‑week moving average), with an extended decline possible toward 33,500.Key constituents such as TCS, Infosys, HCL Technologies, and Tech Mahindra have reversed from their recent highs on both daily and weekly charts, accompanied by strong volumes, indicating persistent profit booking. Meanwhile, Wipro and LTI Mindtree have also registered bearish MACD crossovers on the weekly timeframe, reinforcing the risk of deeper corrections. Heavyweights TCS, Infosys, and Wipro, which collectively make up nearly 70% of the index weight, have convincingly slipped below their 100‑day and 200‑day moving averages, pointing to underlying weakness in the index. Although HCL Technologies and Tech Mahindra continue to trade above key moving average supports, any breakdown in these stocks could further intensify downside pressure on the Nifty IT index.HAL was one of the biggest losers in the week. Do you see some buying support coming in at lower levels?Though it was only two days of sharp fall, a sideways range has been broken, projecting a large downsides, having also closed below super trend. However, the stock has slipped 15%, after testing the 200 day SMA. It appears to have formed an inside bar on Friday, when a positive oscillator divergence was also seen. This fills up with hope that despite all the gloom, some green shoots are visible and a swing higher to 4140-4236 may be played for, with risk restricted to Friday’s low.
Consumer durables have been on an uptrend with Amber shares up xx% in the week. How should one trade the momentum?Ideally, the stock looks poised for 7082, the 200 day SMA. However, oscillators appear to be signalling an exhaustion in momentum, especially as the stock is approaching a horizontal resistance coinciding with January’s peaks. This warns us to take some money off the table, or put 6410 as stop for existing longs.
Give us your top ideas for the week ahead.
FINCABLES (CMP: 771)
View: Buy
Target: 820
SL: 742
Price has built a base around 730–745 and is rebounding toward the declining 100 DSMA near 779 which coincides with the SuperTrend level, first meaningful resistance. A daily close above 780–785 would signal a range breakout, opening 815–820. Failure to clear the 100 DSMA keeps the stock in a sideways-to-down bias within the 745–780 band. Volume has ticked up on the bounce, hinting at improving momentum, but overhead supply remains heavy. Bias turns positive only on strong close above 785 with volume; below 742, risk shifts back to the downside toward 730, 705 levels.
LICI (CMP: 901)
View: Buy
Target: 930-950
SL: 864
A strong breakout candle with heavy volume has pushed price above the recent supply zone 880–890, and the SuperTrend level of 848 turning it into immediate support. Momentum has improved with RSI near 70 and MACD has turned up with a fresh positive cross in daily scale. In the weekly scale, we have seen Supertrend break and the MACD is about to see bullish crossover, confirming trend acceleration. Bias stays positive while above 890. A decisive close above 930 can extend the move to 950; failure to hold 890 would weaken momentum, risking a retrace toward 864-860.
