Indian equity benchmarks have lost more than 5 percent of their value in a sell-off that spanned six straight sessions, with Street punishing every pullback attempt.
How should you approach this market?
Avoid long positions up to 16,050
Mitessh Thakkar of gainingwaves.com thinks the market is in a counter-trend rally. He suggests avoiding long positions unless Nifty50 crosses the pivotal level of 16,050.
On the Nifty Bank, see that point in the 34,200-34,300 zone.
“Around that, it will try to shorten, and if that washes out, get out of short mode and try to take a long exposure,” he recommends.
The Nifty50 managed to cross the 15,900 mark in morning trading on Monday, having found resistance near 16,000 earlier in the day.
At current levels, the index is around 1,350 points below its long-term simple moving average (DMA). The banking index is also below all six of its main DMAs.
| Period (No. of sessions) | an ingenious DMA | Nifty Bank DMA | Sign |
| 5 | 15,985.1 | 33.917,7 | Osuno |
| 10 | 16.306,8 | 34.511,6 | Osuno |
| 20 | 16,722.1 | 35.419,4 | Osuno |
| 50 | 16.963,9 | 35.756,6 | Osuno |
| 100 | 17.186,3 | 36,508.0 | Osuno |
| 200 | 17.251,5 | 36.880,2 | Osuno |
Manish Gunwani, CIO-Equity Investments at Nippon India Mutual Fund, told CNBC-TV18 that the domestic business cycle seems to be better for him compared to the global one.
“Clearly, the very strong global growth outlook from here cannot be a high-probability decision, while on the domestic side, whether it’s from our two-year or 5-7 year perspective, whether it’s spending from capital, exports or domestic consumption. India has been through quite a warm cycle,” he said.
He expects more of the rupee depreciation to help the domestic stock market. The rupee has depreciated against the dollar, but has outperformed major currencies like the yen, yuan and won in the last 1-3 months,” he said.
All eyes on 16,000
Prakash Gaba of prakashgaba.com told CNBC-TV18 that in his opinion an important level to watch is the 15,950-16,000 band, where strong resistance lies.
In his opinion, a cross above on Monday will be very good for the market. “So we can even see levels of 16,100-16,200. So far the market is looking good because I don’t see any weakness but some gain or short covering may happen… At Bank Nifty it looks like 33,500 should be possible and we will see 34,000 possibly in a day or two,” he said.
He expects a bullish move in the banking index which could help the benchmark 50-voucher index.
Here are some calls to make the most of the current situation in the market:
Thakkar has a conditional purchase option on Kotak Mahindra Bank. One can buy shares above Rs 1,820 for a target of Rs 1,855 with a stop loss above Rs 1,804, he told CNBC-TV18.
He also suggests going long on Hero MotoCorp for a target of Rs 2,550 with a stop loss at Rs 2,460.
Sameet Chavan of Angel Broking recommends buying shares of IGL for a target price of Rs 400-405 with a stop loss of Rs 363, and Kotak Mahindra Bank for a target price of Rs 1,850-1,855 with a stop loss of Rs 1,790.