Short-term trend bullish as long as Nifty holds 10,550-10,500 levels

By Manav Chopra

Where we are: Nifty, after the pervious month’s advance, witnessed some profit booking last week as it faced crucial hurdles around the 10,850-10,900 zone. The short-term trend remains bullish as long as the index holds the 10,550-10,500 level which also coincides with the November lows. The recent decline looks corrective in nature and is likely to hold its support levels. Bank Nifty is likely to consolidate its gains and indicates strong support clusters round the 26,000-25,900 levels on the downside which likely to provide cushion in case of a decline.

What is in Store: Nifty indicates range bound action around the 10,500-10,850 levels before any bullish trending move. The oscillators have declined from its overbought zone and any fresh bullish crossover will witness momentum once index exceeds 10,750 levels for higher targets towards the 10,950 and 11,200. Bank Nifty has tested its key long term averages and needs to close above 26,750 levels for any bullish breakout. Expect defensive sectors to outperform and traders can expect a short-term momentum play from Dr Reddy’s Laboratories, Glenmark, Dabur and Colgate-Palmolive.

What could investors do: The FMCG sector has shown relative outperformance and we continue to maintain our long term bullish view. Colgate-Palmolive, Marico & Britannia are our top picks from this segment and we expect an upside potential of 10-15 per cent. PTC India, Zee Entertainment Enterprises and GSFC are stocks that can be bought for an upside potential of 15-20 per cent for next few months.

The author is Head Research- Equity, Indiabulls ventures