Any Bottom-Fishing Ahead Of General Election Could Boost High-Beta Stocks: HDFC Securities

High Beta Stocks Have Already Run-Up In The Recent Past When Nifty Rallied From 10,000 Mark To 10,980 Levels, And Any Bottom Fishing Before General Elections Could Result Another Round Of Upside Bounce For The Stocks


High-beta stocks have already run-up in the recent past when Nifty rallied from 10,000-mark to 10,980-levels, and any bottom-fishing before general elections could result into another round of upside bounce for the stocks, Nagaraj Shetti, Technical Research Analyst at HDFC Securities said in an interview with Moneycontrol’s Kshitij Anand.

An excerpts from the interview:

Q) It looks like the market is witnessing profit-booking at higher levels? We saw index wiping out gains made in the week in one single session. Do see more downside in the coming session?

A) Yes, the recent upside bounce from the low of 10,000-mark was just a trading bounce of a larger downtrend. Friday's sharp downside reversal is signaling more weakness in the near term. The next lower level to be watched is placed at 10,600-10,550 in coming few weeks.

Q) What is your call on high beta stocks? Do you think they will do well in the run-up to general elections 2019?

A) The high beta stocks have already gone up in the recent past when Nifty rallied from 10,000-mark to 10,980 levels. Now, there is a high possibility of a downward correction in those stocks in coming weeks or months. And, any bottom fishing before general elections could result in another round of upside bounce for the stocks.

Q) What is your call on the small & midcap? What does the trading behavior tell you?

A) The mid and small-caps have witnessed a sharp sell-off in the recent months and were not able to outperform in-line with the benchmark index during its recent upside bounce.

The overall broader trend for the mid and small cap segments is weak and more weakness is likely for the near term. One may currently look to book profit or exit long trading positions in those segments.

Q) What are charts of Bank Nifty suggesting?

A) Bank Nifty has outperformed Nifty during its recent upside bounce. Having stuck at the key overhead resistance at 27,500 levels, there is a possibility of more weakness in this sector in the coming weeks. The next downside levels to be watched is placed at 26,200 levels in the next couple of weeks.

Q) Top trading strategies for the coming week with an investment horizon of 1 month?

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The stock price has witnessed an upside breakout from the consolidation pattern on Friday. We observe a positive sequence of higher tops and bottoms as per weekly timeframe chart.

Rise in volume during the upside breakout is signaling positive bias for the near-term. The weekly momentum oscillator like 14-period RSI is showing positive trend ahead

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The stock price as per weekly timeframe chart was moving in a larger consolidation. The stock price has witnessed a sharp upside breakout from the consolidation pattern and closed higher this week.

This upside breakout could also be considered as a triangle upside breakout pattern for the stock price. Volume is rising and the momentum oscillator is also showing a positive indication for the near-term

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