Short-term trend reversal notwithstanding, buy the dips as Nifty headed to 20,000-20,300: Axis Securities
“The index is currently trending up, forming a series of higher tops and bottoms, which indicates a sustained uptrend. As a result, any short-term price corrections should be viewed as buying opportunities,” Axis Securities said in its report. The overall market conditions suggest a favorable outlook for investors, with potential for further upward movement in benchmark indices, the brokerage said.
In the near term, any corrections towards 19300-19100 levels should be seen as a buying opportunity, as the index has the potential to extend its rally and test levels of 20000-20300 points. In the week ended August 10, benchmark indices lost about 0.4%. This was primarily due to the Reserve Bank of India’s move to impose an incremental Cash Reserve Ratio of 10% on banks in its move to tighten the liquidity in the system.
On Friday, Nifty50 ended 0.6% down at 19428.30 points, and Sensex settled 0.6% down at 65322.65 points. On the weekly charts, the index has formed a “shooting star”- a short term trend reversal pattern, indicating profit booking. However, the index is sustaining above its 50,100 and 200-day simple moving averages (SMA), which reconfirms the bullish trend on the short-to-medium term time frame, the brokerage said.
On the upside, resistance is placed around 19800-20000 levels, while on the downside, immediate support is placed around 19400 levels. However, any violation of this support on a closing basis may cause short term correction towards 19100-19000 levels. In case of Sensex, the immediate support level is at around 65300 level, and if this level is broken on a closing basis, then a short-term correction towards 65000-64300 levels could be seen.
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