Stay bullish, be stock-specific

Broad-based buying pulls Nifty to close tad below its 20 day MA signalling a possible bottom formation near the 17,700 area. The Opening was on a positive note with some profit booking seen in initial hours but Nifty recovered well. As per data, we have witnessed a range shift in Open Interest Data for benchmark index with a range, which was previously seen at 17,700 – 18,100, now shifting to fresh long addition in 18,200 – 18,300 CE while on downside 17,800 – 17,900 are now fresh supports.

So this small shift in range in the benchmark index is signalling a base formation at current lower levels and a possible move to the higher side can be seen to 18,200 – 18,180. Nifty still has a key hurdle at 18,342 which needs to be breached on a closing basis to keep bulls' confidence intact.

It is also important that the outperforming sectors which were leading previously have added most gains for the day; such as, PSU Bank, PSE Space along Energy, Metal and Infra. BankNifty was stuck and underpinned due to IndusInd bank whistleblower on loan evergreening that kept its components upside checked. BankNifty has resistance to break at 40,150 levels to continue its momentum on the higher side.

That being said, Quality stocks in the Bank space should be added such as HDFC, ICICI, Canara, BankBaroda and SBI. We continue to remain bullish with a stock-specific approach.

(The authors is a Technical Analyst at Finversify)