The metal sector, known for its cyclical nature, appears to be at the start of a short-term upward cycle, says Kunal Shah, senior technical & derivative analyst at LKP Securities.

“Nifty Metal Index demonstrates a strong uptrend with its pattern of higher highs and higher lows intact. Currently, support is visible in the 8,500-8,400 zone, and as long as these levels are maintained, the outlook remains positive,” he says in a chat with ET Markets. Edited excerpts:

Both Nifty and Nifty Bank hit fresh peaks in the week and now the earnings season will be the biggest driver in the near term. How cautious are the charts looking for the week ahead, which will also be a holiday-shortened one?

Nifty is currently consolidating at higher levels, caught within a broad trading range. Key support lies in the 22,300 to 22,500 zone, with resistance at 22,800. Global market conditions are currently unsupportive, and geopolitical tensions between Israel and Iran adding to market nervousness. For the index to continue its upward movement and potentially reach the 23,200 level, a decisive break above the 22,800 resistance is necessary.

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Realty and metal stocks were among the top gainers on positive news flow. Do you see more upside in the coming week?

The metal sector, known for its cyclical nature, appears to be at the start of a short-term upward cycle. The Nifty Metal Index demonstrates a strong uptrend with its pattern of higher highs and higher lows intact. Currently, support is visible in the 8,500-8,400 zone, and as long as these levels are maintained, the outlook remains positive. Additionally, the Realty Index has historically been a strong performer and continues to show positive momentum in the short term. Market expectations post-election include a potential rate cut, which could trigger further buying momentum in these sectors.

How do you see the trajectory of smallcaps? Has the dust settled down and is it time to go long once again?

As we approach the general elections, historical data suggests that volatility in the smallcap space is likely to be high. It is advisable for investors to adopt a stock-specific approach rather than focusing on entire sectors or indices. For managing existing long positions, it is recommended to keep trailing stop losses to protect gains. Additionally, any new positions should be backed by a robust risk management strategy to navigate the anticipated market fluctuations effectively.Hindustan Zinc was the top gainer in BSE500 pack and ended the week 27% higher while Vedanta ended 17% up. Do you see the two stocks on an overbought trajectory?

The rally in both stocks has been sharp, leading them into overbought territory, which complicates taking new positions at current levels from a risk management perspective. However, both stocks remain well-positioned, and any dips toward their respective support zones—Vedanta at Rs 340-350 and Hindustan Zinc at Rs 400-380—should be considered as potential buying opportunities.

Give us your top ideas for the week.

Buy UTI AMC at Rs 920. Stop Loss: Rs 880. Target price: Rs 1,000/1,060

The stock is demonstrating bullish signals, evident from the formation of a bullish Flag pattern on the daily chart, positioning it near a breakout. It has shown resilience by repeatedly bouncing off its short-term moving averages (20DMA and 50DMA), indicating robust support at lower levels. Currently, the support is identified at Rs 880, providing a solid base for potential bullish movements. The stock is targeting higher levels, with upside potential at Rs 1000 to Rs 1060.

Buy Motherson Sumi above Rs 123. Stop loss: Rs 116. Target price: Rs 130-140

Samvardhan Motherson stock is showing signs of a potential breakout, having formed a bullish diamond pattern on the daily chart. Recent days have seen an increase in trading volumes, indicating growing buyer interest at lower levels. Furthermore, a positive crossover in the momentum indicator RSI supports this bullish momentum, suggesting a favourable outlook in the short term.

Buy SAIL at Rs 155. Stop loss: Rs 140. Target price: Rs 170-185

The stock is displaying a strong bullish trend, as indicated by a rounding bottom formation on the weekly chart and a subsequent breakout above the previous 20-week high. It has maintained a pattern of trading in higher highs, reinforcing the uptrend. The momentum indicator RSI is currently above 60, further affirming the stock’s bullish momentum. Visible support is at 140, suggesting that dips should be seen as buying opportunities. The targets for the stock are set at 170 and 185, highlighting potential upward movements.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)