We expect Nifty to extend time wise consolidation phase in the coming weeks while price wise correction will be limited, Dharmesh Shah – Head Technical, ICICI Direct.com Research said in an exclusive interview with Kshitij Anand of Moneycontrol.
Q) It has been a bad week for traders, Nifty lost over 176 points to 9,788. Where is the market headed in the coming week?
A) The Nifty50 tested its August 2017 low placed around 9,685 in the last week’s decline. The minor pullback in the last two sessions highlights the emergence of value buying at the key support base of 9,650-9,700 region amid highly oversold conditions after the sharp fall of 4.8 percent in the preceding seven sessions.
Going forward we expect the index to extend the time wise consolidation phase in the coming weeks while price wise correction will be limited.
We expect the index to hold the 9,650-9,700 support base in the present scenario and extend the ongoing consolidation between 9,650 and 10,000 levels over the coming weeks.
We expect stock specific action to pan out in the upcoming truncated week with focus being on the RBI monetary policy and September Auto sales numbers.
Q) What do weekly and monthly charts suggest?
A) The sharp decline in last two weeks has seen the index retrace its last rising segment of 24 sessions (9,685 to 10,178) in just eight trading sessions.
The faster retracement of last rising segment confirms pause in the ongoing rally since January 2017 and opens the floor for further time wise consolidation going forward.
Q) What should be the ideal strategy for investors in the coming week – buy on dips, sell on rallies?
A) The index has taken a pause after the strong rally of over 24 percent in CY17. Historically, bull markets tend to undergo periodic phases of secondary correction which in turn creates fresh buying opportunities.
We believe the index is undergoing a secondary corrective phase that forms part of the larger degree uptrend, therefore, investors should utilise this as an opportunity to accumulate quality stocks in a staggered manner.
Q) Any stocks which are looking interesting based on technical parameters?