Private large-cap bank stocks like HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank, which form about 60% of the Bank Nifty, were covered by longs buildup or shorts on a week-on-week basis, said Chief Markets Anand James Is said. Strategist, Geojit Financial Services. “In the case of HDFC Bank and IndusInd Bank, delivery buying has started picking up pace this week. Nifty Private Bank index has seen a hammer candle near the rising trendline in the weekly chart, which supports our positive bias,” he says.
Edited excerpts from the conversation:
This week, the trend of one day’s rise and one day’s fall was broken with four consecutive gains in Nifty. Are we hitting new all-time highs in the coming week? What could interrupt this upward phase?
The previous pressure point near 22,100 is expected to trigger rejection trades, but Friday’s volatility suggests it has already been priced in and perhaps cleared the way for a smooth move to 22,450-550 early on. Minor resistance is seen near 22,250. The downside will remain at 22,835, which is the nearest congestion point of the note. A known risk to this trajectory is the possibility that there could be further headwinds that could set back expectations of a rate cut. While last week’s US economic releases have been favorable, given the long streak of bullish sentiment, a blow to rate cut expectations could make the bullish trend vulnerable to a correction, especially with elections around the world. As well as due to the forecast of El Nino this year.
Bank stocks have started outperforming with some participation from private sector banks too, while PSU banks remain unbeatable. Do some chart reading for us.
If the broader market resumes the uptrend, private banks will be the biggest gainers, with the Nifty Private Bank index closing above the 20-day SMA for the first time since January 16. We noted last week that given the strength of directional dynamic indicators, the bullish trend in PSU banks is not over yet, but they are poised for a correction over time.
Looking at the performance of Nifty and Nifty Smallcap 100 indices this week, Smallcaps have started to underperform. Do you see more profit-booking in small-caps and value buying in large-cap private bank stocks?
The Nifty Smallcap 100 index’s decline from an all-time high near 15,227 was stopped and in recovery, the price ended above 61.8% Fibonacci retracement level of 16,123 which is positive. While 65% of Nifty Smallcap100 stocks are still trading above 20 and 50 DSMA, 50% of the stocks had a positive close this week. The average RSI of weekly decliners is around 48 and the average RSI of gainers is around 54, which indicates that there may not be any major move to the downside. We believe the Smallcap index is likely to remain positive as long as it remains above 15650 in the short term.
Largecaps like HDFC Bank, ICICI Bank, Axis Bank, and IndusInd Bank, which make up about 60% of BankNifty, were covered by long buildup or shorts on a week-on-week basis. In the case of HDFC Bank and IndusInd Bank, delivery purchases have started picking up pace this week. The Nifty Private Bank index has seen a hammer candle near the rising trendline in the weekly chart, which supports our positive bias.
ITC shares fell below the Rs 400 level on Friday. Given all the buzz over the BAT stake sale, do you see more downside pressure on the stock after looking at the volume and delivery data?
After top out in late 2023 and rejection trades at the peak in early 2024, ITC is headed to the downside, our comfortable buy zone will be near 315. However, last week’s consolidation accompanied by high volume, followed by Doji on Friday, potentially points to an upside move with a target of 430, especially with the positive divergence visible in the ROC.
Give us your top business ideas for the week
Wipro (CMP: 543)
See: Buy
Target: 560-590
Stoploss: 528
The consolidation that we saw in the stock during the period of July 2022 and November 2023 was broken in December 2023 which is continuing. The stock is trading above its 20 and 50-month SMAs. Furthermore, we have seen a supertrend breakout on the monthly time frame, which has strengthened our expectations for further upside. We expect the stock to move towards 590, the 61.8% Fibonacci retracement level of October 2021 and the March 2023 low, in the coming weeks. All longs can be protected with stoploss placed below 528 level.
IPCLab (CMP:1241)
See: Buy
Target: 1285 – 1330
Stoploss: 1204
The stock has been in a reversal since May 2023 and after a minor consolidation in November, we have seen a breakout indicating more bullishness in the coming weeks. A bullish Marubozu candle on the daily time frame reinforces our sentiment of more positivity in the coming weeks. We expect the stock to move towards 1285 and 1330 in the next few weeks. All longs can be protected with a stop loss placed below the 1204 level.