Hero Moto, Maruti & M&M have 10% upside in the short term

By Manav Chopra
Head of Research- Equity, Indiabulls Ventures

Where are We? The Nifty last week witnessed high volatility and closed below the 11,100 levels. On the weekly charts the index has declined for five consecutive weeks and has entered into the oversold zone. The index faces immediate resistance at 11,200-11,250 levels on the upside and need to close above this for a short-term trend reversal and a retracement rally. The Bank Nifty has shown early signals of a pullback rally as there are series of divergence on the intraday charts.

What is in Store? The Nifty on the daily charts has formed lower candlestick shadows in the recent fall which indicates 10,950-10,850 as a support zone. The prices have bounced from its deep oversold levels and can expect a pullback rally in the near term towards the 11,350-11,450 levels. The Bank Nifty faces immediate resistance around the 28,650-28,750 levels and the price patterns indicate strong support clusters around the 27,900-27,800 levels on the downside which likely to provide cushion in case of a decline. The momentum would turn positive above 28,550 and one can expect a retracement move towards 29,250-29,500.

What can Investors Do? The auto sector is bouncing from its oversold levels and can expect Hero MotoCorp, Maruti & Mahindra & Mahindra to see an upside of 10 per cent in the short term. The IT sector is likely to continue its outperformance and we expect HCL Tech and Tech Mahindra to see an upside of 10-15 per cent from the current levels.