Tuesday 20 March 2018

10033 defended for a time being, ‘Pharma’ shows some promising signs

“Weak cues from the US bourses continue to put burden on our markets at least during the opening formalities. The similar thing was witnessed at the opening today; however, we saw a v-shaped recovery right from the word go. In fact, due to emergence of buying at lower levels, the index went on to trade well within the positive territory during the course of action. Eventually, Nifty managed to reclaim the 10100 mark on a closing basis.
 
Looking at the important swing low of 10033.35 and especially the kind of open interest pile-up seen in 10000 Puts, today’s recovery post the gap up opening was not so surprising. The question lies whether it’s sustainable or not? If we have to take a directional bet then we continue to expect sliding below this level and entering sub-10000 levels in the near term. Since, it would not be wise to project time targets, we would advise traders to remain with the ongoing trend and avoid trading aggressively on long side in case of any bounce back. For the coming session, 10155 – 10224 continue to act as a strong hurdle; whereas on the downside, 10090 – 10033 would be seen as a crucial support zone for the current series.
 
It’s advisable to remain light and should ideally focus on individual stocks if Nifty remains within a range of 10224 – 10033 for next couple of days. Yesterday, although most of the beaten down stocks showed some life, the ‘Pharma’ basket caught our eyes and have shown some promising signs. During the day, ‘Nifty Pharma’ managed to recover from its multi-year lows, which coincides with multiple key technical indicators. Hence, we expect some decent moves in this space going forward. From this basket, ‘Sunpharma’ remains to be our preferred bet, which we believe is poised for a decent up move in the near term.”

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