This is a time for caution rather than being aggressive: Mr Mustafa Nadeem, CEO, Epic Research
Nifty ended down for a fourth consecutive week and it's a first since the start of 2019. The selling pressure intensified due to multiple domestic factors and negative global cues. Technically RSI has almost touched the oversold level of 30 this week indicating the sell-off was too deep. Nifty also was able to retain the support area which is placed at the levels of 11200.
RSI has been showing divergence for a while and this correction seems to have been due. Now we are at a very important support zone which is coupled with 200 days SMA placed at 11135. The cool off in prices was also witnessed in the second half of the week with the market recovering to close above the previous two day's close.
Fundamental arent supporting at this point in time. While earnings were in much better shape in the previous quarter; this quarter has seen numbers much lower and with a recent dismal performance from Auto, FMCG we believe the sentiments may remain negative. The HUL has seen growth slowing to almost 7 quarters low. The auto companies are already in a bad shape and we believe this may continue for this quarter as well until demand picks up in its season. The topline for many companies have not been good and only financials are able to report better number but with increased provisioning and reduced NIMs.
FII /FPI has been negative since the Budget and we have seen them pulling out 12K Cr till this date. All eyes will now be on coming RBI meet in August.
Global cues have also been negative in terms of earnings as most companies who have reported to date saw a decline in earnings and further reducing EPS making it a second straight quarterly drop.
We believe this is a time for caution rather than being aggressive and going out with a shopping bag. It is now only select few stocks that need to be handpicked at this point of time. While Index may consolidate between 11200 - 11450 in the short term.
YESBANK - Stock formed a flag pattern on the hourly chart and closed near to days high with high volumes. We recommend buying above 97 for the target of 99 with the stop loss of 95.
BAJFINANCE - Stock took the support of the 200 EMA on the daily chart and closed in green with good volumes. It also formed a flag pattern on the hourly chart. We recommend buying above 3275 for the target of 3325 with the stop loss of 3250.
ZEEL - stock outperformed well with good volumes and closed near to days high. It formed a flag pattern on the hourly chart. We recommend buying above 406 for the target of 410 with the stop loss of 402.