Navigating bull run: Rajesh Palviya's insights on Bank Nifty and sectoral moves

“The overall structure is still bullish for Bank Nifty. The major trigger was HDFC Bank. Though most private banks have done well in the last couple of days, stocks like ICICI Bank, Kotak Bank, and Axis Bank have also participated in this rally,” says Rajesh Palviya of Axis Securities. Edited excerpts:

ET Now: I want to talk about the Bank Nifty in particular because, even on days when Nifty was gaining, you have seen Nifty Bank come under a little bit of pressure. This is on the back of the quarter one updates that have come out recently. Federal has done exceedingly well, while HDFC Bank, on the flip side, has disappointed. PSU banks are riding high on their cash deposit ratio. So, tell us what levels you are watching out for Nifty Bank going ahead, and also give us a sense of what we can expect when these numbers finally come out for quarter one. How would you prefer to play this sector? Would it be private versus PSUs, or are you going to be stock-selective in both sectors?

Rajesh Palviya:

Bank Nifty was muted for the week, ending around 52,500. However, looking at the data setup, 52,000 has attracted more put writing, so that is likely to act as a good support area in a decline. So, 52,000 would be the immediate and important support area on the downside. On the higher side, 53,000 would act as a supply zone, with major call concentration placed around that strike. I think if it crosses 53,000, then we may attract short-covering action in the market and see further higher levels.

The overall structure is still bullish for Bank Nifty. The major trigger was HDFC Bank. Though most private banks have done well in the last couple of days, stocks like ICICI Bank, Kotak Bank, and Axis Bank have also participated in this rally. Even some like Federal Bank have contributed to this up move. Most private banks are still holding their ground at higher levels. Some cooling off from higher levels has been witnessed in today's session, but we believe that, except for HDFC Bank, most private banks are holding their ground.

We believe that there will be a resumption of the uptrend going forward. Some PSU banks have also shown good accumulation activity. From that space, I think SBI and PNB look promising at this moment, and I think we can see buying interest going forward. From private banks, we like ICICI Bank and Kotak Bank. From PSU banks, SBI and PNB can be looked at for long trades. We believe that there will be a rally in Bank Nifty, so 52,000 should be your stop loss to hold your long position in Bank Nifty.

ET Now: I want to come back to you. While Mr. Bagga is slightly cautious about both sectors, I want to understand your view of the market going ahead. Given the bull run we have seen, remember one month ago we saw an 8% cut in the Nifty on the back of that election outcome. From there, we see where we are today, at 80,000 on the Sensex. Do you think this kind of bull run is sustainable? Are you penciling in a time correction for the markets? If so, how much do you see the indices correcting by?

Rajesh Palviya:

Broadly, what is happening in the market is driven by two factors. One is sentiment, which is extremely bullish. The second is liquidity flow, with continuous inflows from the domestic front. There is no pause on the flow side. These two major factors are driving the market at this moment.

Despite the sharp run-up in the last couple of weeks, the broader market, midcap, and smallcap spaces are attracting buying interest. There are expectations related to the budget and long-term reforms driving continuous buying flows in the market. We believe that as long as 24,000 is intact on the Nifty, there won’t be any cautious stance at this moment.

The trend is likely to remain bullish. So, 24,000 should be the important support area on the technical front for the Nifty. Until we break those levels, a buy-on-dip strategy should be followed. The global market is also supporting this trend. Across the board, we are seeing good traction in terms of buying, and this rally can extend further. There is no signal at this moment indicating a near-term reversal.

ET Now: With earnings season starting soon, the IT pack has been moving since last week. This is the seventh day in a row that IT stocks have been on the rise. What are the expectations building up? Many brokerage notes are optimistic about upcoming IT earnings. What do you see on the charts right now? Are you recommending trades in IT spaces before the earnings start?

Rajesh Palviya:

Yes, some IT stocks are looking very promising. The IT space has moved up in the current week, with a 4-4.5% gain in most of the IT index. Stocks like Infosys and TCS from the largecap space are holding their ground at higher levels, and we may see more upside in Infosys. 1680 to 1700 would be the next target for Infosys, as the stock is comfortably holding above 1600. Long build-up has been seen in the last couple of days. We believe that Infosys could be a stock to focus on.

Some midcap IT stocks are also looking promising. Mphasis from the midcap IT space is looking very strong, along with Coforge. Mphasis managed to give a breakout from a three-month consolidation range, so there could be a continuation of the up move. 2750 to 2800 could be the next target, with a stop loss around 2580. Coforge is also looking bullish, with a breakout and long build-up in derivatives. The target for Coforge could be 6000, with a stop loss around 5790.

ET Now: Do you have any more recommendations to share with our viewers for the week?

Rajesh Palviya:

Yes, the first stock is Reliance Industries. The way Reliance Industries is moving up, we believe there is potential for further upside. The stock managed to break out from a minor dip over the last four days. The next target for Reliance Industries would be 3260, with a stop loss at 3150.

The second stock is from the pharma space, Aurobindo Pharma. The stock reversed a three-week decline in the current week, showing a strong bullish candle. We believe that the rally can continue, with a target of 1340 and a stop loss at 1265. The third stock is from the power sector, CESC. It is a midcap stock trading near its all-time high, with strong buying action throughout the week. The target for CESC could be 185, with a stop loss around 162.


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