It is a growth oriented policy, yes. They brought down inflation expectation just a bit but still the direction is downward. But markets seem to have taken this as a trigger of booking profit. Is it general profit booking or something bearishness is engulfing the charts in your language?
Markets definitely have cooled off a bit but I do not take this in a big negative way because a) structurally the trend of the market is still up unless and until we form a decisively lower top, lower bottom formation. I do not think so there is a reversal happening. What we are closely watching is the kind of unwinding that is seen in puts so no real cause or concern. And secondly, the volumes on Nifty Futures are not that alarming although there was a slight uptick when the press conference was on. But I think technically speaking, as long as we are above 18600, Nifty should be fine. Dips should get bought into and what we also have to see is globally markets are also fine. So maybe a couple of hours here and there and eventually markets should follow their track. So broadly we are expecting this dip to get bought into and 18888 which is the previous all-time high should be taken out anytime soon.
What are the levels on Nifty, Bank Nifty to watch out for?
The banking index has been sort of on the tenterhooks trying to break out. Today was an ideal day for the breakout to happen but so far it has not happened but structurally speaking, as long as we are above 43700, I think the banking index remains neutral. Once it crosses 44500, I think shorts will feel the pinch and we should see a breakout happening in the banking index as well.
So banking index, I think a breakout is very much on the cards. PSU banks are the ones to go for. These are the ones where the risk reward is very, very favourable. Private banks have done their bit. I think the second round of up moves should come in from the PSU banking space from the likes of SBI, Canara Bank, Bank of Baroda. Overall, I think it is more of a conditional trade in Bank Nifty if you get it around 44000, risk reward remains favourable for longs or in case 44500 is taken out, you could then take it as a breakout trade where you feel 45000-45200 is very much on the cards for the banking index.
What is your take on the power stocks which are firing away in the trading session? And I mean sometimes they do become trader favourite just because the margin etc is low. So NTPC, PowerGrid, Tata Power, even Torrent Power for that matter. Is there any name that you are spotting for us?
Power stocks have seen good traction today. In fact, NTPC not only is on the power space but also one of our topics on the public sector enterprises space, it looks very good on the charts. Technically speaking, 200 is very much on the cards for NTPC. Can be bought, place a stop loss at 175. I think given the overall setup in the power generation companies, power transmission will be slightly tricky but here I think NTPC clearly is the sectoral leader. So we would go ahead with NTPC. Looks good for a 10% upside from current levels and traders can expect a rising momentum once we cross the 180 area mark.
A word on Paytm, if you track that one closely because it seems like it is finally breaking out a bit?
Yes, this stock underwent an elongated period of underperformance. Finally, I think it is coming out of the woods. And technically, what is happening is this reversal is backed by decent volumes on the cap side. But I think the setup has long moves. It may take some time but structurally we feel that the stock is headed for 850-860-900 on the upside. If you have a two-three month horizon, I think it is best to stay invested in the same.
One can look to buy on dips. I think 700 is a very strong base for the stock and that can be kept as a stop-loss in case things go southward. But structurally, we feel that the stock has got long legs and one can expect 850-900 in the next couple of months.
But what are your own top recommendations?
Yes, so one of them we have already discussed which is NTPC. I think there is another cash stock which looks good. NBFCs have been pretty much right in the limelight. I think Poonawalla Fincorp is one of those setups which seems ready for another round of an up move. The stock has consolidated around 350 marks since the last few trading session. I think now the time is right for an upward move until 380 or even 400 at max. So, one can look to buy Poonawalla Fincorp have a stop-loss at 5% lower around 340 and we believe that good momentum should persist in the NBFC space.