Rahul Sharma from JM Financial Services in an interview to ET Now pointed to a significant technical setup unfolding at a crucial support zone.
“So, it is quite an interesting price behaviour at the crucial 50-day EMA support which is around the 25,740 odd. So clearly, the markets are lacking follow-up selling pressure after the last three days of selloff that we saw. Today, we are seeing a strong recovery of sorts and this is backed by put writing which means put call ratio is also improving as we speak,” he said.
According to him, the key lies in the market’s ability to sustain this rebound through the closing.
“Now, the key thing is sustenance. So, if we do manage to close above the 25,850 mark, that would be a positive signal and Nifty could very well head towards 26,100, 26,200 in the next few trading sessions,” he added, emphasising that the recovery is emerging precisely from a crucial support region.
Sharma highlighted that historically, such setups often lead to meaningful upside moves.
“Looking at the way the market breadth is today and looking at the way the derivatives data is building up, it is an indication that there is more often than not generally such kind of a bounce back converts into a 300-point kind of an move for the Nifty.”
He maintained a constructive stance on both frontline indices, adding that Bank Nifty appeared comparatively stronger.
“So, the view remains positive on the Nifty and as far as Bank Nifty is concerned, that is the one which is leading the market. On the way down, it did not correct as much and now we feel that the timing is right for the banking index to again cross the 60,000 mark and give a decisive close above the same. So, both Nifty and Bank Nifty view remains positive with Bank Nifty having the edge as of now given the resilience seen in the private banking space.”
Stock Ideas for Thursday’s Trade
When asked about stock-specific ideas, Sharma shared two names from the auto and pharma space.
“Yes, so there are two of them. One of them is on the auto space. So, Eicher Motors, the stock has been consolidating close to its recent high. In fact, no correction seen in this stock in spite of the Nifty fall of around 500 points. So, Eicher Motors is looking good for a target of 7500 to 7600. One can look to buy with a positional perspective with a stop loss placed at 7100 on the downside,” he said.
He also highlighted a developing bullish structure in Glenmark Pharma, albeit with conditions.
“Apart from that interesting setup is seen in Glenmark Pharma as well. This is a conditional buy. Look to buy once it crosses the resistance area of 1975. It is currently trading at 1962. The risk-reward is favourable in the same and the next targets at Glenmark Pharma are seen at 2050, 2070 on the upside. So, immediate buy is Eicher Motors. Glenmark can be considered once it crosses 1965 on the upside with the stop loss placed at 1930.”
