nifty bank: More pain ahead for the market next week, Bank Nifty will be the main hurdle – Sharekhan’s Ratnaparkhi

NEW DELHI – In the past week, a combination of factors including disappointing earnings from IT heavyweights and a new aggressive tilt from the US Federal Reserve has dragged down benchmark stock indices.

Several technical indicators suggest the pain is not over yet, says Gaurav Ratnaparkhi, head of technical research at BNP Paribas’ Sharekhan.

“Multiple technical parameters suggest the index is likely to remain under pressure over the coming week. For Nifty, 17,400-17,500 is a crucial resistance zone,” Ratnaparkhi told ETMarkets.com.



“Unless this barrier is removed to the upside, Nifty is expected to retest last week’s low of 16,824; below which 16,600 will be the subsequent target.”

In the past week, Nifty50 lost 1.7 percent to 17,171.95. Amid strong selling pressure in the first two trading days of the previous week, the index fell below the 17,000 mark, hitting a low of 16,824.70 on April 19.

BANK CARRYOVER

Ratnaparkhi warns that Nifty Bank, which has suffered heavily so far this month, is expected to be one of the main headwinds to the overall index in the coming week.

“Going forward, Nifty Bank is expected to break last week’s low of 35,926 and may drop towards the daily lower Bollinger Band, which is near 35,000. On the other hand, 36,800-37,000 will act as a short-term cap.”

He believes the banking sector is likely to continue a “correction” phase. The Nifty Bank Index fell 4 percent last week.

SECTORAL OBSERVATION

The technical analyst is optimistic about the outlook for the energy sector, which has shown an upward trend in recent weeks.

This trend is evident in the Nifty Energy Index, which has seen gains along with the expansion of the upper daily and weekly Bollinger bands. The index has added 2.5 percent in the past week.

“We expect this sector to stay on the upward trajectory,” says Ratnaparkhi.

According to him, the IT sector, which for the last 2-3 weeks has succumbed to strong selling pressure, could experience a rebound.

“This sharp drop pushed daily momentum indicators into oversold zones, which are now poised for a recovery. So a rebound in the IT space is on the cards.”

Looking ahead, the automotive and infrastructure sectors are on Ratnaparkhi’s radar. After a brief hiatus in the penultimate week, these sectors are “starting” a new rally, the technical analyst said.

His optimism in these sectors stems from the fact that the short and medium term structures show inherent strength.

“So we expect outperformance from this space in the coming months.”

He warned, however, that there were risks in broader markets, particularly in the small-cap space.

“…market participants need to be very cautious about their exposure to small caps,” he said.

So far this month, the BSE small-cap index has added 4 percent, while headline BSE Sensex has lost 2 percent.

STOCK PICKS

Ratnaparkhi recommends buying

prescribing a price target of Rs 8,300-8,510 and a stop loss of Rs 7,600.

“The stock has come out of a short-term consolidation. You have broken out of a side channel and have started the next leg up. The daily momentum indicator has triggered a bullish crossover and a new bullish cycle has started from the balance line.”

The analyst’s advice is to sell Piramal Enterprises May futures. His target on the stock is Rs 2,080-2,000, with a stop loss of Rs 2,280.

“The stock recently stumbled near its crucial weekly moving averages where it formed an inside bar pattern on the daily and weekly charts and entered correction mode…The daily momentum indicator is timed to the downside.”

He also recommends selling May Futures

. His target for the stock is Rs110 to Rs104 with a stop loss of Rs121.

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

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