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Banks, NBFCs, consumption likely to outperform: 3 stocks with 8-15% return in short term


An index is likely to remain sideways in the range of 10,880 to 10,680 in the forthcoming trading week with slightly negative bias.

Manish Srivastava

It might give an impression that bulls have taken the rally forward in Nifty50, if we look at the prices on a weekly closing basis but things are not as embellished as it is appearing. Even though the gain of more than 150 points has been registered in the week gone by but, the behaviour of bulls during the last trading week is raising a question mark on the strength of an ongoing rally. Gap up opening on July 6 could not attract the follow up buying and prices remained sideways throughout the week just below its 200-day simple moving average, which is placed at 10,876. The inside day pattern on a daily time frame which was followed by "Doji" on Friday's trading session and indecisive small body candle in a weekly time frame suggesting that rally is losing steam and a phase of distribution might start in coming days.

An index is likely to remain sideways in the range of 10,880 to 10,680 in the forthcoming trading week with slightly negative bias. Breaking below the lower range i.e. 10,680 could result in profit booking and slide in such case can be expected till 10,528 and even till 20 DMA which is placed at 10,428. Having a glance with the birds-eye view and considering the advanced Fibonacci system, Nifty50 is trading with "justified good above series" and rallied after trading the "master high" of 10,328.50 formed on June 8. The same master high will now act as strong support in coming days on the way down and until the prices are trading above it, the medium-term trend will remain up but short term volatility will not be ruled out.

Bank Nifty on the other hand looks more lucrative and could outperform Nifty50 in the coming days. When Nifty is trading near its 200 DMA, the Bank Nifty is still trading far below its 200 DMA which is placed at 26,340 indicating that it has more headroom for rally. The trend reversal buying is emerging in many banking stocks and range breakout along with positive moving average crossover can be seen in the banking index itself.

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