Bank Nifty slipped below 200 EMA which stands at 35500, and the trend may continue till 33000-32900 levels that’s next support zone for Bank Nifty, Gaurav Garg, Head of Research at CapitalVia Global Research – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts:  

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Q) What is your call on markets as benchmark indices recorded its worst fall since April? Important levels to watch out for.

A) The Nifty50 lost 1200 points since last week and Bank Nifty lost 3,000 points since last week. The Nifty50 is trading below its 100-Days EMA and Bank Nifty trading below 100, 200-Days EMA.

From the technical perspective, the Nifty50 is following a downward channel pattern on the daily chart and is making lower lows and lower highs that clearly indicate a bearish trend.

The Nifty50 has strong support near the 200-Days EMA placed at 16250 and the levels of 16900 and 16950 will act as an immediate resistance points.

The Relative Strength Index (RSI) on the daily chart is 31.00, and it continues to show a mild bullish divergence. The Nifty marked a new 14-period low; the RSI did not, and this led to a mild bullish divergence of RSI against the price

In the coming days, the zone of 16200-16300 will be a crucial zone for the Nifty50 to defend on a closing basis. In the present technical setup, it is strongly recommended to continue avoiding major exposures.

All exposures should be kept modest, and bullish outlook only above 16,900 level for long-term trading

Q) There are 60 stocks that are trading below 100 & 200-EMA in the BSE100 index. There are 13 stocks with a market cap of more than Rs 1 lakh cr slipping below 200-EMA. Should one go cautious and avoid contra trade?

A) The Nifty50 has a bearish trend and is trading below 100-Days EMA and SMA and most of the quality stocks are trading below 200 EMA.

From a long-term perspective, aggressive investors/traders can make positions on lower levels in HDFC Bank Ltd, Hindustan Unilever, Kotak Mahindra Bank, Axis Bank Ltd.

Investors can close out long positions when the Nifty50 trade below the 200 EMA support on a closing basis. Moderate and conservative investors can wait for confirmation of the Nifty crossing the level of 16900 on a closing basis.

A continued cautious outlook is advised and no contra trade below 200 EMA levels is advisable.

Q) What does it mean when the stock or index trades below 200EMA?

A) EMAs are used as indicators for long-term trends. The 200-day EMA is considered a key indicator by traders and market analysts for determining overall long-term market trends.

EMAs can give traders a sense regarding whether the trend is up or down, while also identifying potential support or resistance areas.

If prices close below 200 EMA is considered a bearish trend and a price close above 200 EMA is considered a bullish trend

Q)  The Nifty Bank also slipped below 200-EMA – what should investors do? Crucial levels which one should watch out for?

A) Bank Nifty slipped below 200 EMA which stands at 35500, and the trend may continue till 33000-32900 levels that’s next support zone for bank nifty.

Long-term traders can hold quality stocks and accumulate when Bank Nifty comes at 33000 level or cross 35500 level on the upside that is an important resistance point. Fresh long positions are advised above 35500 level only.

The levels of 35500 and 35550 will act as immediate resistance point; the supports come in at 33300 and 33200 levels.

Q) Many banking stocks have also slipped below the long-term average. Any stocks that are looking for a good buy on dips stocks?

A) Yes, some quality stocks like Axis Bank HDFC Bank already corrected 15-20% from higher levels. HDFC Bank has strong support at 1358-1360 levels axis bank is also trading near support zone that’s 650-660, A long is advised on dip with small 2%-3% stick stop-loss

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)