Stock Market

Nifty Metal index looking most lucrative: Expert

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Mehul Kothari, Senior Technical Analyst, Indianivesh SecuritiesWhere are we: The Nifty spot collapsed more than 20% during the week to retest 8,500-mark.

Eventually, it closed near 10,000-mark with a weekly change of -9.5% following the sharp recovery on Friday.

On the other hand, the Bank Nifty has lost around 23% to retest 21,000 and closed above 25,000 levels. What is in store: On Friday, the index almost tested 8,500 mark and bounced back sharply.

In addition, 8,500 is the 161.8% Fibonacci retracement level (Golden Ratio) of the move from the low of 10,004 (October 2018) to the peak of 12,430 (January 2020).

There is a long term-rising trend line placed near that support zone.

We are of the opinion that for the coming weeks 8,500 could be a strong base for the markets.

Now since the pullback was sharper, some more hiccups can be witnessed in the coming sessions.

In such a scenario, 9,400–8,800 could be intermediate support and thus it can be a fresh buying area for conservative traders.

On the upside, 10,300-mark, which is a gap area, would be the real test for the bulls. What traders can do: Nifty Metal index is looking most lucrative.

It has been trading in a falling channel since the past two years and is currently at the lower end of the same.

Also, there is a positive divergence in weekly RSI which indicates that metal stocks could bounce sharply.

Although we witnessed a recovery in stocks like Tata Steel, SAIL, Hindalco, JSW Steel etc.

during the previous session, they can be again bought on dips for the coming week.

Apart from metals, we like stocks such as ITC, Reliance and Tata Motors which too can be traded with a positive bias on some dip.




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