technical analysis: Wait for signs of recovery before entering FMCG, worst is over for IT near term: Astha Jain

Domestic stock markets rose over the week amid supportive global signals and pain in IT stocks, at least in the short term, it’s over, says Astha Jainsenior research analyst, Hem titles. She suggested waiting to get into FMCG stocks. Read the edited excerpts:

The Nifty50 index ended the week with strong gains. What were the main reasons for this benchmark performance and what is your outlook for the coming weeks?
The Nifty 50 index ended 294 points or 1.68% higher at 17,833 for the week. The index rose sharply on strong global markets and falling crude oil prices. On the economic side, the S&P Global India Services PMI business activity index jumped from 55.5 to 57.2, indicating growth. Buying from FIIs along with strong auto numbers also led Indian indices to end in green territory over the past week. Looking ahead, we believe that the Nifty continues its positive momentum and may see a rally to the 17,960-18,100 level in the future.

What do you think of Nifty Bank playing on similar lines during the week? Do you see an outperformance in the next few days? If so, what are the banking stocks to watch in the short term?
Nifty Bank ended the week with gains of 2.5% or 994 points at 40,415, showing a clear outperformance of the index over the week. We expect the Banking Index to continue to post positive performance in the near term, with the Bank Nifty moving towards the 40,800/41,300 levels.

look strong on the charts. showed a record close above the 550 level. The stock can be considered a positional buy at the current level with a price target of Rs 585/625 in the short term. & Axis Bank also look strong on the charts with price targets of Rs 940-1015 and Rs 815-855, respectively.

On a technical level, what are the main support and resistance levels for Nifty and Bank Nifty and what should investors’ strategy be to get the most out of them?
On the technical side, Nifty has major resistance at the 17,960 and 18,110 levels while major support for Nifty is seen at the 17,780 and 17,630 levels. Bank Nifty may face major resistance at the 40,800 and 41 levels 300 while major support for Bank Nifty may be at the 40,100 and 39,700 levels.

After a solid loss, IT stocks were back in shape this week. Do you think the worst is over for them or is there still pain? Suggest a few IT actions to consider.
On the weekly charts, the Nifty IT index showed a positive reversal after two consecutive negative closes. The Nifty IT index may show a bit more upside from the current level to 30,500 in the short to medium term. Therefore, for now or in the short term, it can be said that the pain is over for the IT index and two stocks that look good in the IT universe are

& L&T tech services. Tech Mahindra may be a good buy with a price target of Rs 1,196-1,230 while L&T Tech Services may reach a level of Rs 3,900-4,040 in the medium term.

Back to recommendation stories

Cement stocks have performed very well over the past month, providing strong returns for investors. Do you think this dynamic will continue? What are your top picks in the cement space?
Cement stocks have already performed strongly on the stock exchanges due to the decline in the price of the main petroleum coke inputs and increased demand from the infrastructure sector. In cement stocks, buying down is recommended at the Rs 6,400-6,500 level with a price target of Rs 7,500 in the medium term.

Ahead of the long-awaited end-of-year celebrations, FMCG and consumption themes are at the center of attention. Do you also agree with this idea? What are your top picks in these sectors?
We would like to wait before making an entry into the FMCG space as some early signs of recovery have started to appear with the cooling of commodity prices as well as demand from the rural sector following a normal monsoon and d ‘higher MSP, but we’d still like to give a bit more time before entering this space. However, in the FMCG space, stocks are looking good on the charts with an upside target of Rs 530/550 in the medium term.

Which sectors do you think can be in flavor for the rest of 2022 and where do you find value? How should investors approach them?
Going forward, the energy sector looks strong on the charts along with infrastructure, the consumer durables sector or the banking sector. The buy on bottom strategy can be adopted while investing in energy, consumer durables and infrastructure stocks, while buying on current levels is recommended in banking stocks.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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