IT sector may do well, showing strong overall momentum - Epic Research

Mr. Mustafa Nadeem, CEO, Epic Research

Nifty ends down for a second consecutive week tracking the global and domestic sentiments as bears grip strengthened on the overall market. Nifty's close is relatively lower as compared to previous week while the breadth which we saw improvement in first few initial days turned down as well signaling the gains to be momentary.

The global equity markets started the week on a positive note on the back of positive data from the US in terms of Unemployment claims coming lower while profit booking continued at higher levels. European markets also were in a range bound territory while taking cue from western markets. Asian markets were down as the rebound which was seen seemed to fade off.

Indian equity markets started the week on a positive note as there was a bounce from one of the most important moving average, 200 SMA. The bounce was evident as markets breadth also improved for first two days which resulted in a pullback of more than a 2%. Nifty failed to sustain the higher levels on closing basis as there was a distribution at higher levels with an attempt towards 10500 which was negated by bears and close was near to its 10 days SMA. Banking Sector continued to decline with negative sentiments of PSU banks growing larger. Bank Nifty which saw a sharp recovery towards 24700 also fell back to its previous week level and closed below 24500. The averages are playing their important roles since it has been weeks that Nifty is trading below its short-term MA of 20, 50 and 100. There has been a bearish crossover of the same as well.

In upcoming week, we expect lower levels to be met in Nifty with support coming in at 10040. A Break of this level will drift Nifty to lower levels of 9850. Bank Nifty also has short-term supports at 24100 on the downside and beyond that 23500. Since we are in a medium-term trend of bearish momentum we may see any pullback as an opportunity for bears to position size and take the momentum in their favor.

Sector-wise we have been negative since starting of March series and we continue to remain bearish specifically in Banking, Metals, PSU banks and Automobile. These sectors have shown weaker rollovers previously and negative momentum for the major part of March series also shows that it may drift further lower. Sectors that may perform on the upside are limited given the rise in volatility. IT Sector is one of the sectors that may do well as it is in short-term profit booking but overall momentum is strong and should see some buying coming in at lower levels. The appreciation in USD against INR will also favor the stocks. Select stocks from Pharma Space like Ajanta Pharma and Divi may be well for short term while chemical space may do well on the back of lower level buying.

Fundamentally most news has been incorporated and next trigger that may set the tone for the market will be how FII and DII numbers are and post-march numbers that will be the main driver of Indices.

Stock Recommendations:

IDEA - Stock has shown strength in the bearish market with good volumes. The RSI and CCI have also given a breakout on the daily chart. The golden crossover has also been seen on the hourly chart. We recommend buying from current level for the target of 85 with the stop loss of 79.

CANFINHOME - Stock performed well in down market with good volumes and took the support of 200 DMA on the daily chart. The golden crossover has also been seen on the daily chart. We recommend buying from current level for the target of 555 with the stop loss of 530.

NIITTECH - After a good upside rally today stock has shown reversal on the daily chart with good volume and the RSI has also shown a reversal from the overbought zone on the daily chart. We recommend selling from current level for the target of 900 with the stop loss of 950.

Source : Equity Bulls

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