Nifty to face volatile bouts, may find support at 17,000 levels

The recent weakness in the stock market led by renewed foreign portfolio selling could spill over to the next few days with the Nifty expected to decline to 17,000-17,150-levels. The index closed at 17,327 on Friday. US indices fell 1.6-1.8% on Friday in another bout of a sell-off.

The mood is jittery ahead of the September series derivative expiry on Thursday and the Reserve Bank of India’s policy meeting on Friday when the central bank is expected to raise rates. But, analysts do not rule out a technical rebound around 17,000-17,150. ICICI Bank, Kotak Bank, Axis Bank, JM Financial, KPIT Tech, and Nazara Technologies are some of the stocks suggested by analysts for trading.

ARPAN SHAH
SENIOR RESEARCH ANALYST, MONARCH NETWORTH CAPITAL

Where is the Nifty headed this week?
Nifty traded volatile during the last week and closed near the 17,300 level. It had a sharp rally during the first half of the week but faced strong selling pressure from the 17,900 level. Nifty will likely find support near the 17,000-17,150 zone, and we may witness a strong pullback towards the 18,000 level. Nifty Bank will likely find support near the 38,800-39,000 zone and again head for its all-time high level of 41,800.

What should investors do?
Investors should use the current dip as a buying opportunity in mid-cap and small-cap stocks as the higher top – higher bottom structure is still intact on the Midcap index. Stocks like CreditAccess Grameen and Fiem Industries are good accumulation opportunities at the current level. Expleo Solutions is a strong accumulation opportunity from the small-cap segment at the current level. KPIT Technologies from the midcap segment has given a fresh breakout. From the sectoral perspective, the IT index has reached a very strong support zone and is likely to witness value buying at the current level.

VIKAS JAIN
SENIOR RESEARCH ANALYST, RELIANCE SECURITIES

Where is the Nifty headed this week?
Nifty has again resisted crossing 18,000 levels and witnessed a sharp decline. We believe the markets will have a volatile trade with sharp swings on account of rollovers and we expect some bounce from the lower part of the range of 17,150-17,000 levels — being the key long-term averages and 38.2% retracement of the entire up move (15,200-18,100) — whereas on the higher side crossover of 17,700 levels will confirm a positive breakout.

What should investors do?
The IT sector has been under pressure since the start of April. It is down by 28%, whereas Nifty is up 3% in the same period given the contraction in valuation multiples with the rupee at a new low to the dollar. Any positive surprise in next month’s quarterly results could lead to a strong upside to make a contrarian buy from current levels. High-beta sectors like metals, realty, and capital goods could witness some corrective action. After a 5% decline from its all-time high, the most outperforming sectors like banking provide a good opportunity for stocks like ICICI, Kotak, and Axis Bank.

MEHUL KOTHARI
AVP-TECHNICAL RESEARCH, ANAND RATHI SHARES

Where is the Nifty headed this week?
A double top formation on the Nifty at the 18,100 mark has played well. Due to the heavy selloff, the index has also breached the support of 17,450 and has closed below this level. Thus, we maintain our stance that the ongoing pessimism might drag the index towards the recent low of 17,166, and that would be a decider whether this is just a minor correction or the beginning of a fresh fall in markets. There is a possibility of some bounce in the Nifty index after such a sell-off, but on the upside, 17,750 would be a strong hurdle for the coming week.

What should investors do?
We are witnessing a fresh breakdown in the Nifty Bank index along with the negative divergence in daily RSI. We could witness a further fall in the index towards the 38,500- 38,000 mark in the coming week. We are witnessing a fresh range breakout in JM Financial, and the price action is accompanied by rising volumes. Buy the stock for a target of Rs 80 with a stop loss of Rs 69. Also, buy Nazara Technologies above Rs 765 for a target of Rs 830 with a stop loss of Rs 730. On September 9, Nazara underwent a sharp breakout above the Rs 730 mark with heavy volumes.