Karnataka election outcome would be the major trigger for the market in the coming week, and If NDA wins with a clear majority, then there are chances Nifty could scale up towards 11,000 levels in May series itself, Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities said in an exclusive interview with Moneycontrol’s Kshitij Anand.

Q) The Nifty50 rose by 1.7 percent for the week ended 11th May despite some volatile moved seen during the week. Do you think we should be able to climb 10,800 levels and head towards 10,900 next week irrespective of Karnataka election results?

A) Karnataka election outcome would be the major trigger for the market in the coming week. The market has already discounted the positive side of the election outcome in prices.

In case of any negative surprise, we may see corrective action taking Nifty to the levels of 10,550-10,400 over the coming weeks. If NDA wins with a clear majority, then there are chances Nifty could scale up towards 11,000 levels in May series itself.

On the weekly chart, the index has formed a long bullish candle forming higher High-low compared to the previous week and has closed above previous week’s high indicating positive bias.

The index is moving in a Higher Top and Higher Bottom formation on the weekly chart indicating sustained uptrend. The index has retraced and closed above 61.82 percent Fibonacci retracement levels of the previous downfall (11,171-9,952) which signals bullish sentiments ahead.

The chart pattern suggests that if Nifty crosses and sustains above 10,840 levels it would witness buying which would lead the index towards 10,900-10,950 levels.

However, if the index breaks below 10,700 level it would witness some profit booking which could take the index towards 10,600-10,550 levels.

Q) It looks like 11000 strikes is attracting a considerable amount of open interest. Do you think Nifty could reclaim Mt 11K in May series?

A) The Nifty 11,000 strike price is having highest open interest addition of about 59.50 lakh share which is likely to act as a hurdle.

However, on the other hand, any positive surprise from election front can take Nifty above 11,000 level which may cause short covering action in market-leading it to a new high in coming days.

Highest Put concentration for Nifty of 62 lakh shares exists at 10,500 followed by 51 lakh at 10,600 which are likely to act as support in the near-term.

We expect the market to remain in a broad range of 10,500-11,000 for May series, despite any election outcome.

Q) Plenty of stocks hit fresh 52-week highs or record highs in May series. Do you think these are stocks which are carrying the momentum and investors should stick with them?

A) We advise one to hold on to stocks which are hitting fresh 52-week highs till Nifty trades above 10,700-10,600 level as momentum will continue on the upside in these stocks. Once Nifty reclaim above 11,000 level, we may see outperformance in these stocks.

Q) What is your call on Smallcap and Midcap stocks? Should investors stay away or just book profits on rallies?

A) In the recent past, accumulation and buying interest at lower levels have been seen in some of the quality midcaps and smallcap stocks.

We believe that stocks with good fundamentals backed by a good set of number in Q4FY18 results would continue to rally as the benchmark index is in bullish zone.

Q) What is your call on Rupee for the coming week?

A) On the weekly chart, USD/INR has formed a bullish candle and has managed to break out above last two-week consolidation. USD/INR is forming higher top higher bottom formation on weekly charts which indicates sustained strength.

USD/INR is holding above its breakout of rounding bottom formation which signifies bullishness ahead. If USD/INR sustains above 66.75 level we may see upside momentum towards 67.80-68.50 level in coming weeks.

Once USD/INR breaks below 66.75 then we may see some unwinding action which could drag it towards 66.15-65.60 level. We expect USD/INR to trade in the range of 66.75-68 for the coming week.

Q) Top 3-5 positional calls which could give handsome returns to investors in next 1 month?

Here is a list of top four stocks which could give up to 10 percent return in 1 months:

PTC India: Buy | CMP: Rs 98 | Target: Rs 104 | Stop loss: Rs 93 | Return: 6%

PTC India has formed a solid Bullish candle on the weekly chart indicating positive bias ahead. Another prominent observation on the price chart of PTC India was that the entire consolidation under way since Jan 2018 till date has formed a down-sloping trend line.

The breakout of this trend line is witnessed at Rs 92 level on the weekly chart. The stock is sustaining above its 20 and 50-days moving average which supports bullish sentiments ahead.

Both daily and weekly strength indicator RSI along with the momentum indicator Stochastic are in a bullish territory and are sustaining above their reference lines which signals strength and upward momentum in price.

Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 102-104.

Hindustan Petroleum Corporation: Buy | CMP: Rs 318.75 | Target: Rs 338 | Stop loss: Rs 303 | Return: 6%

Since last month, Hindustan Petroleum Corporation was in major consolidation mode within Rs 314-290 band on the weekly chart. It gave breakout at Rs 314 levels and is sustaining above the same.

The stock is also sustaining above its 20-days SMA which supports bullish sentiments ahead. On the volumes front, the stock has witnessed significant rise around breakout level indicating increased participation on the rally.

Both daily and weekly strength indicator RSI along with the momentum indicator Stochastic are in bullish territory and sustaining above their reference lines which signals strength and upward momentum in price. Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 332-338.

Exide Industries: Buy | CMP: Rs 261 | Target: Rs 280 | Stop loss: Rs 247 | Return: 7%

The most prominent observation on the price chart of Exide Industries is that the entire consolidation under way since February 2018 till date has formed up-sloping trend line.

The breakout of this trend line is witnessed at Rs 255 levels on the weekly chart. The stock is sustaining above its 20, 50, 100-days SMA which supports bullish sentiments ahead.

On the volumes front, the stock has witnessed significant rise around breakout level indicating increased participation on the rally.

Both weekly and monthly strength indicator RSI along with the momentum indicator Stochastic are in bullish territory and sustaining above their reference lines which signals strength and upward momentum in price. Thus, taking into consideration the above factors, the maximum upside can be expected to Rs 275-280.

eClerx Services: Buy | CMP: Rs 1,379 | Target: Rs 1,525 | Stop loss: Rs 1,300 | Return: 10%

The most prominent observation on the price chart of eClerx Services is that the entire sideways consolidation under way since February 2018 till date has taken the shape of a bullish Head & Shoulder formation as highlighted in the adjoining daily price chart.

This pattern breakout was observed at Rs 1,361 levels (Neckline at Rs 1,361). The measuring implication of the price pattern i.e. the distance from the neckline to the base of the Head & Shoulder formation is (1,360-1,160=200 points) projected from the breakout level of Rs 1,360 provides upside target of Rs 1,560 approximately.

The stock is sustaining above its 20 and 50-days EMA which supports bullish sentiments ahead. On the volumes front, the stock has significantly risen around breakout level.

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