Rahul Sharma, a market strategist, explained the current scenario for investors in an interview to ET Now: “So, definitely Nifty has gone back into that sideways consolidation zone after the big rally of thousand points that we have seen. Now, ideally a bounce back from 25,000 odd would have been ideal for the rally to continue. But looking at the way the derivatives data is shaping up, looking at the way we are seeing overall trade below the 25,000 mark, it seems like Nifty could head towards a 24,800 mark on the downside which is another 175 points from the current levels. It may not be like a fast down move, but yes, slowly, gradually the grind is very much on.”
Sharma highlighted that 25,000 has acted as a key psychological level so far: “So far in this series we have seen 25,000 as a psychological level, put writers have been present at this strike price, they are getting challenged for the first time and today if we do manage to close below that, that would be a strong signal for the Nifty breaking down on the daily charts and heading towards our given targets.”
Bank Nifty, meanwhile, is hovering around its support at 55,000, which coincides with the 20-day EMA. “Here PSU banks have been the ones which have provided a cushion. Private banks have been under selling pressure and Bank Nifty could also head towards lower targets of 54,400, 54,200 on the downside. So, it is a make or break for Bank Nifty at 55,000 whereas Nifty if it manages to not recover today and close below the 25,000 mark, some more bearish signals are expected in the coming few days,” Sharma added.
On stock-specific opportunities, Sharma suggested a cautious approach. “We are seeing fresh breakdowns happening in Tata Motors, so this stock has been under selling pressure since yesterday. Strong volume seen in both the sessions and now the next meaningful support for the stock is placed at 645, 640 on the downside. So, it is quite a sell-off in the same, look to sell on bounce. The stock is already down by 3% today, but in case there is an intraday bounce back, look to sell around 670 with a stop loss placed at 685 and a downward target of 645 in the short term.”
On the other hand, some stocks present buying opportunities. “Something which is also looking good on the long side is MCX. Now MCX has been consolidating around the 8,000 area for quite some time. The stock has not reacted to the overall weakness in the market and once it crosses 8135 on the upside, we feel that there is a good up move that can come up to 8,400 on the upside. So, adopt a long-short approach. We are buying into strength which is MCX and selling into weakness which is Tata Motors,” he said. Market experts advise investors to closely monitor Nifty’s 25,000 mark and Bank Nifty’s 55,000 support, as a breach could set the stage for further downside pressure in the near term.
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