“The Nifty IT sector has faced downward pressure for the past few days. However, stalwarts like TCS and HCL Tech exhibit resilience on longer-term charts, suggesting potential buying opportunities amid corrections. We remain watchful of Nifty IT’s ability to hold the 100-day moving average; sustaining above it could signal further buying interest,” says Rajesh Palviya of Axis Securities. Edited excerpts:

ET Now: What is your assessment of the current market conditions? We observed from derivatives data that Nifty found solid support at 21,900. Additionally, market breadth displayed bullish tendencies. Do you anticipate a continuation of the relief rally or is consolidation also probable?

Rajesh Palviya: This week, both indices experienced a breakdown of crucial support levels. Nifty briefly dipped below its 50-day moving average, while Bank Nifty breached the 100-day moving average. However, robust recovery in recent trading sessions has pushed both indices back above the 50-day moving average, indicating a positive near-term outlook. As long as both indices defend this level, the trend is likely to remain bullish. Call-put concentration suggests 22,000 remains a key resistance area, with significant put writing between 21,900-22,000. Sustaining above 22,000 could trigger short-covering, potentially driving Nifty towards 22,250-22,300. Currently, our stance is bullish, recommending a buy-on-dips strategy with 21,900 as a stop-loss for Nifty and 46,500 for Bank Nifty. We anticipate further recovery towards 47,200 for Bank Nifty leading up to the March series expiry.

ET Now: Could you shed light on the recent performance of the IT index, particularly in light of Nifty IT hitting a two-month low and being the top sectoral loser for the week? Is this decline temporary or indicative of a deeper downturn? Furthermore, what strategy would you suggest for navigating this sector, especially considering the contrasting performance of midcap and largecap IT stocks like Coforge and Infosys?

Rajesh Palviya: The Nifty IT sector has faced downward pressure for the past few days. Currently hovering near its 100-day moving average at around 35,100, a breach of this level could lead to further declines towards 34,700-34,600. However, stalwarts like TCS and HCL Tech exhibit resilience on longer-term charts, suggesting potential buying opportunities amid corrections. We remain watchful of Nifty IT’s ability to hold the 100-day moving average; sustaining above it could signal further buying interest. For traders, monitoring levels around 35,100 is crucial. Preferred picks include TCS and HCL Tech, provided they hold crucial support levels.

ET Now: Amid sectors like automobiles, capital goods, and real estate witnessing significant movements, what are your insights? Could you recommend potential stocks from these sectors?

Rajesh Palviya: Nifty Auto continues its bullish trajectory, with stocks like Maruti, Bajaj Auto, and Mahindra & Mahindra trading near all-time highs. Maruti presents an opportunity for another rally towards 12,600-12,800, with a stop-loss at 12,100. Similarly, Bajaj Auto shows promise with a near-term target of 9,300 and a stop-loss at 8,750. Mahindra & Mahindra, despite recent corrections, remains strong on longer-term charts, with an upside potential towards 1950-2000 and a stop-loss at 1830.

ET Now: How do you foresee the performance of PSU stocks, particularly in the energy and banking sectors? Could you suggest potential trading strategies?

Rajesh Palviya: PSU stocks have witnessed a robust recovery, indicating further upside potential. Key stocks like Canara Bank and BHEL exhibit strong buying interest, with targets towards 590-600 and 2% stop-losses. Overall, as long as Nifty holds above 22,000, we anticipate continued recovery in the PSU basket. Investors can consider adding these stocks to their portfolio, with CPSE ETF also presenting an attractive option with a target around 85 and a stop-loss at 76.

ET Now: Lastly, which stocks are on your radar for next week’s trading? Could you share your bullish picks?

Rajesh Palviya: As we approach the March series expiry, several stocks are trading near all-time highs. Pidilite stands out with a target of 3015 and a stop-loss at 2920. JSW Energy exhibits recovery potential towards 545, with a stop-loss at 506. Additionally, Indus Towers shows promise with a near-term target of 295 and a stop-loss at 266.