Edited excerpts from a chat with James on near-term market outlook
And which stocks to buy:
Both Nifty and Nifty Bank hit new highs this week and earnings season will be the biggest driver for now. How cautious will the charts be next week, which will be a holiday-shortened week?
HDFC Bank, ICICI Bank, SBIand axis bank The banking sector, which makes up the bulk of the Nifty 50 banking sector, appears exhausted, suggesting profit-taking in the short term. By the way, 70% of the time over the past 10 years, Bank's Nifty has returned an average of 5% in the fourth quarter earnings season. This gives us hope that profit-making efforts may not last long.
Chart-wise, the Nifty has just fallen off the top of the ascending parallel trendline channel that has sustained the price since early 2023. Price has tested the lower end of this channel twice in 2023, but so far this year, the lowest has been to the midline of the channel. This suggests that there is plenty of room for downside.
Real estate stocks and metal stocks were among the top gainers on the back of positive news. Will we see more upside next week?
The real estate industry has had a strong week, with 30% of stocks hitting new 52-week highs last week.Meanwhile, heavyweight DLFdid not participate in this week's rally, but appears to have formed a bearish MACD breakout on the weekly basis.
Popular metal index Adani Enterprises, JSW Steeland tata steelaccounts for 47% of the Nifty Metal index but did not play a role in this week's rally. The main contributions are: hindustan zinc, VedantaHindalco together form 27% of the Nifty Metal index.
How do you see the trajectory of small-cap stocks? Now that the dust has settled, is it time to go long again?
The Midcap150 and Smallcap250 indices appear to be gearing up for a new rally, a trend that was confirmed last week. This week, 41% of Smallcap250 stocks fell within the 50-60 RSI range, adding momentum to the ongoing pullback.
Hindustan Zinc and Vedanta posted double-digit gains this week. Do you think these two stocks are trending overbought?
There was an RSI breakout in both stocks, suggesting that both are on a strong uptrend with momentum that could continue even in overbought conditions. 397-450 for Vedanta, 397-450 for Vedanta and 510 for Hindustan Zinc, assuming a multi-week horizon.
What are your top ideas this week?
Age Scheme (CMP: 480)
View: Buy
Target: 510 – 535
Stop loss: 459
The stock price has been on an upward trajectory for a long time and continues to do so. It recently broke through horizontal resistance and ventured into uncharted territory, suggesting further positivity. On the weekly chart, a bullish Marubozu candlestick is forming, indicating further upside in the short term. In the short term, we expect the stock to trend toward 510 and 535. All longs can be protected by setting a stop loss below 459.
IRCTC (CMP: 1057)
View: Buy
Target: 1100 – 1140
Stop loss: 1008
Since its listing, the stock has remained positive and continues to perform well. Recently, it broke above the wedge pattern resistance with a break in the MACD signal on the weekly time frame, indicating that it is positive in the short term. We expect the stock price to trend towards 1100 and 1140 in the coming weeks. All longs can be protected by placing a stop loss below the 1008 level.