Edited excerpts from a chat:
Nifty lost around 2% over the past week. What does the weekly chart tell you? Is this still a correction within a larger range, or has the index entered a deeper downtrend? What are the key levels to watch next?
The Nifty has clearly entered a phase of heightened weakness. The index is now witnessing its fifth consecutive weekly decline, with the current week’s fall taking it close to the 88.6% Fibonacci retracement of the previous rise from 23,070 to 24,774. The broader setup has weakened as the index has slipped comfortably below critical moving averages. The daily RSI has also slipped deep into the oversold zone.
Though the weekly chart setup continues to look very bearish and the index may crack further, the near-term setup points towards a possible recovery towards 23,600–23,800, provided it holds above 23,300.
I am not comfortable calling this a bottom yet, but I would bet on a short-term pullback, provided crude oil prices do not move significantly higher from current levels.
IT was the clear casualty of the week. After this steep fall, are Infosys, TCS, HCLTech and Tech Mahindra technically oversold enough for a rebound, or do the charts suggest another leg lower?The IT sector has witnessed a significant breakdown in momentum. The Nifty IT index fell sharply during the week, including a 3.24% single-session decline, its steepest fall in about three months.
At current levels, some of the frontline IT stocks are certainly entering oversold territory on shorter timeframes. However, it is still too early to call a bottom. The sector is facing both technical and macro headwinds, with rising US bond yields, rate-hike concerns and uncertainty around global technology spending adding to the pressure.
Among the four stocks, I would be relatively more constructive on Tech Mahindra, as it remains the only large-cap IT stock among the four that is trading above its 200-DMA. On the other hand, the other three stocks remain highly vulnerable to further selling pressure.
Overall, a cautious approach should be maintained in the IT space as long as the Nifty IT index remains below 29,300.
With Godrej Properties, Lodha, DLF and Oberoi Realty under pressure, has the realty sector’s medium-term technical structure been damaged, or is this still a buy-on-dips correction?
The Realty index has slipped below its recent consolidation range, indicating profit booking in the sector. The index showed little respite during the week, barring some short covering in the final hours of trading on Friday.
However, an important point is that the index remains well above its 52-week low and has not yet broken its broader medium-term price structure. It is also sustaining above its 200-day moving average (200-DMA). Therefore, I would classify the current move as a meaningful correction within the broader uptrend, rather than a confirmed long-term trend reversal.
For the sector, the 820–830 zone is an important support area. Sustaining above this range could trigger a technical rebound towards 900-950. However, a decisive break below 820 would weaken the medium-term structure considerably and could open the door for a decline towards 750.
Hence, I would prefer a selective buying approach at current levels or on further corrections, while maintaining a cautious stance and focusing on stocks with relatively stronger technical structures.
Wires and cable stocks have witnessed one of the sharpest sector-specific selloffs, but we saw Finolex Cables rebounding around 17%. Purely from a technical lens, how do you see this upmove and whether more steam is left?
Finolex Cables presents an interesting technical setup, as the recent rebound has been accompanied by strong price momentum. The stock rallied from around Rs 1,178 on September 2 to nearly Rs 1,500 by September 11, with particularly strong gains recorded over the last few trading sessions. Technically, the stock has reclaimed its short-term moving averages and is currently trading above its 50-EMA and 200-SMA, indicating an improvement in the overall technical structure. The weekly chart setup also remains positive. Besides, the RSI is in a positive crossover and is trading in a high-momentum zone, suggesting strong underlying price momentum.
However, chasing the stock at current levels could be risky following the sharp recent rally. A better strategy may be to consider accumulating the stock on a correction towards Rs 1,330, with a stop-loss placed around Rs 1,270. On the upside, if the stock resumes its recovery after a consolidation or correction, it could potentially move towards the Rs 1,520-Rs 1,600 zone.
Give us your top ideas for the week.
APOLLO
Buy: Rs 422 | Stop Loss: Rs 404 | Target: Rs 450
The stock has been sustaining at higher levels following a falling channel breakout on the daily chart. The recent correction has been relatively shallow, suggesting that it was primarily a phase of profit booking rather than a meaningful trend reversal. Friday’s positive price action further supports this view.
Besides, the stock continues to sustain above its critical short-term moving averages, indicating that the underlying trend remains positive. Over the short term, the stock could continue to remain strong and potentially move towards Rs 450.
On the downside, Rs 404 remains an important support and stop-loss level.
LAURUSLAB
Buy: Rs 1,969 | Stop Loss: Rs 1,900 | Target: Rs 2,100
The stock remains in a strong uptrend, characterised by a consistent higher-top, higher-bottom formation. Over the past year, most consolidation phases on the daily chart have eventually resulted in upward breakouts.
Although the stock has already witnessed a significant rally, this alone does not necessarily indicate an imminent reversal. The broader trend structure continues to remain intact, and the recent breakout from a brief consolidation further supports the positive technical setup.
In the near term, the stock could potentially move towards Rs 2,100. However, a sustained fall below Rs 1,900 would weaken the current technical structure, and an exit below this level would be an appropriate risk-management strategy.
ETERNAL
Buy: Rs 323.50 | Stop Loss: Rs 310 | Target: Rs 347
The stock has been maintaining a higher-top, higher-bottom formation since mid-March, indicating a positive broader trend. Recently, the price retraced from its recent high and has closed just above the 50-EMA.
The current setup appears favourable for a short-term recovery on the daily timeframe, particularly as the hourly RSI is showing a bullish crossover, indicating improving short-term momentum.
Over the short term, the stock could potentially move towards Rs 347, while Rs 310 remains an important support and stop-loss level.
