However coming to the sectors, the efficiency has diversified. Thus far this yr, Nifty Realty and Nifty Auto — up 44 per cent and 38 per cent respectively — have been the leaders whereas Nifty Media and Nifty IT, down 14 and three per cent respectively, have been the laggards.
Given the divergence, we took a take a look at the charts of key sectoral indices and have recognized the potential outperformers, going forward, based mostly on technical evaluation.
To journey on the seemingly outperformers, buyers can go for index funds or ETFs (Alternate Traded Funds) based mostly on the indices. However remember that you must select passive funds based mostly on parameters equivalent to liquidity, expense ratio, monitoring error and monitoring distinction, amongst different issues. Within the absence of a fund mirroring the index or if you happen to want to place your bets on particular person shares, now we have advised shares (that are constituents of the index) that seem bullish on the charts.
Nifty IT (34,599)
2024 has not been good thus far for the IT index. It has been one of many weakest sectors by dropping 3 per cent year-to-date. Nonetheless, within the first week of June, the index gained sharply. Notably, it bounced off a long-term trendline, which it met at 31,700. Additionally, the development has been bullish since April final yr and so, the decline within the first half of this yr is extra of a corrective transfer.
As per the chart, the medium-term development will likely be bullish as long as the help at 30,000 stays legitimate and the long-term development will come underneath check provided that Nifty IT slips under 26,300. We count on the index to start a rally from right here, which might maintain for the following two to a few years.
Going forward, Nifty IT is predicted to surpass the prior excessive of 39,447 and recognize to 50,250 in about two years. That mentioned, en path to 50,250, potential resistance ranges are at 43,000 and 45,800. These ranges are based mostly on Fibonacci extension. As soon as the index touches these ranges, we’d see a minor corrective decline. However bearish development reversal can occur solely after Nifty IT hits 50,250.
Therefore, for buyers in search of long-term investments, the IT sector presents good alternatives.
Technique: Those that want to take publicity to the index can contemplate the mutual fund route and go for Nifty IT index funds/ETFs, a lot of which can be found throughout fund homes.
Purchase now and add extra models when the index drops to 30,000. Hold stop-loss at 25,800. When the index goes above 40,000, path the stop-loss to 36,000. Regulate the stop-loss as much as 41,500 when the index touches 45,000. Liquidate at 50,000.
For individuals in search of shares, HCL Applied sciences and Wipro seem good on the chart. These are anticipated to do properly over the following few years.
Helps: 30,000 and 26,300
Resistances: 40,000 and 50,250
Nifty Media (2,058)
Nifty Media, not like most different sectors, has thus far solely seen a restricted restoration put up the 2020 fall. Whereas nearly all sectoral indices have made new life-time highs put up the Covid fall, Nifty Media continues to be at a 44 per cent low cost in comparison with its lifetime excessive of three,675.8, made in early 2018. Even this yr, by dropping 14 per cent YTD, it has been the worst performing sector thus far.
However tides are turning and the index exhibits potential for an upswing, going forward. This time, it may get previous the closest barrier at 2,500 within the coming months and lengthen the rally to retest the important stage at 3,675.
Because the ultimate quarter of 2021, Nifty Media has been caught within the broad 1,660-2,500 vary. There are probabilities for the index to stay under 2,500 for the following few months. Nonetheless, as we talked about above, we count on it to finally get away of two,500 and set up a long-term uptrend.
A rally previous 2,500 can occur earlier than the tip of the primary quarter of subsequent yr. As soon as this happens, we are able to count on a rally to three,600 inside two years put up the breakout. That mentioned, there are just a few value areas that may act as a provide zone, probably resulting in a decline. These are 3,000 and three,300.
However, such dips are anticipated to be short-lived and will be seen as shopping for alternatives. Until the help at 1,660 stays legitimate, the broader development will likely be optimistic. Due to this fact, buyers who want to bottom-fish can take a look at the Nifty Media index.
Technique: Whereas there are not any index funds/ETFs obtainable for Nifty Media, buyers should purchase shares within the index to capitalise on this potential upside. Zee Leisure Enterprises and Solar TV Community collectively represent 42 per cent of Nifty Media. Additionally, technically, these two shares show appreciable upside potential. So, buyers can cut up the funding meant to media shares to 2 halves and purchase these two shares.
Helps: 1,660 and 1,000
Resistances: 2,500 and three,600
Nifty FMCG (57,226)
Though the general development is bullish for Nifty FMCG, the index has not been doing properly thus far in 2024. This index is among the many high laggards regardless of the latest rally. Nonetheless, it isn’t gloom and doom for the index because the prospects, particularly for the following two to a few years, seem good.
The upswing this month has given hope for the bulls. Two weeks in the past, the index bounced off the 50-week shifting common, which is at present at 53,710, and hit a file excessive of 58,832.65. It’s now hovering above 57,200.
Whereas the momentum is in favour of bulls, we can’t reject the opportunity of the index moderating earlier than the following upswing. A attainable correction from right here can drag Nifty FMCG to 52,000. The value band of 51,000-52,000 is a requirement zone. As well as, there’s a long-term rising trendline help that may arrest the autumn. Solely a breach of those helps can overturn the uptrend.
Ultimately, we count on the index to witness an upsurge, which might raise it to 69,000 over the following couple of years. Word that the value area between 69,000 and 70,000 is a resistance. After Nifty FMCG reaches this stage, there could possibly be a fall.
Because it rallies, the index can face hurdles at 61,400 and 63,500. The previous is a minor one and so the bulls can ease previous whereas the latter can set off a decline however nothing greater than a corrective one.
Technique: Contemplating the above, we suggest that buyers purchase index funds/ETFs in two tranches and maintain till the Nifty FMCG index hits 69,000. ICICI Prudential Nfity FMCG ETF is the one fund with Nifty FMCG as benchmark. In case you are comfy with different facets of the ETF as talked about at first, you’ll be able to make investments right here.
Buyers should purchase now and at 52,000 with preliminary stop-loss at 47,500. Ebook income at 69,000.
In the event you aren’t comfy, contemplate investing in shares on this sector which present potential. The charts of Dabur India, Marico and ITC trace at a substantial rally from their present ranges. The primary two shares have seen a recent breakout, which aligns them with the general bull development, growing the chances of a rally. The value motion of ITC signifies that the corrective decline could possibly be coming to an finish and a recent leg of rally can start.
Helps: 54,000 and 51,000
Resistances: 63,500 and 69,000
Nifty Non-public Financial institution (24,777)
Nifty Non-public Financial institution, since December final yr, has been tracing a sideways development. The index was oscillating between 22,800 and 25,000. Early this month, the index noticed a spike on the again of a rising trendline help at 23,000. Along with the trendline, its 50-week shifting common at 23,550 aided its transfer up.
The chart signifies that the broader development is bullish, and the index is prone to get away of 25,000. However having mentioned that, it may see a decline earlier than the eventual breach of the higher boundary of the vary. The downswing from right here, if it happens, is much less prone to transcend the help at 22,000. Nifty Non-public Financial institution index has obtained a powerful base at 22,000 and 20,500. Till the latter stays legitimate, the development will likely be bullish.
As soon as the index surpasses the barrier at 25,000, it will probably open the door for a recent leg of rally. This upswing can take Nifty Non-public Financial institution to 32,500 earlier than the tip of subsequent yr. There could possibly be intermittent corrections throughout the course of the up transfer. Such corrective dips can occur at 27,000 and 30,000.
Technique: Fairly just a few fund homes supply ETFs based mostly on Nifty Non-public Financial institution
One can provoke longs now at 24,770 and accumulate if the index drops to 22,000. Cease-loss will be at 20,000. When the index surpasses 27,000, modify the stop-loss to 24,800. As soon as the index tops 30,000, elevate the stop-loss additional to twenty-eight,000. Liquidate the longs at 32,000.
IDFC First Financial institution, Metropolis Union Financial institution and Kotak Mahindra Financial institution are the constituents in Nifty Non-public Financial institution that may recognize properly.
Helps: 22,000 and 20,500
Resistances: 30,000 and 32,500
Nifty Pharma (19,896)
Nifty Pharma, which started its latest leg of rally in March 2023, entered a consolidation part in March this yr. 19,400 stopped the bulls. However since then, the index was charting a horizontal path and didn’t see a fall. It was fluctuating between 19,400 and 18,300.
With this background, Nifty Pharma gathered energy and surged previous the higher finish of the sideways band a few weeks in the past. The leg up was assisted by a rising trendline help. This breakout transfer has set the tone for Nifty Pharma to see one other spherical of an upswing.
Substantiating the bullishness, the value motion on the weekly chart exhibits a affirmation of a bull flag sample. As per this chart arrange, the index is prone to soar to 23,600 shortly. That mentioned, given the momentum, we forecast Nifty Pharma to the touch 24,000 earlier than the tip of 2025.
Though the rally will be sharp, the index can face boundaries at 21,800 and 22,500. These resistance ranges may not set off a bearish development reversal however can result in minor corrective declines.
In case Nifty Pharma makes a U-turn and falls under the help at 18,300, the short-term development can turn out to be bearish. However, as long as the bottom at 16,000 stays true, the long-term inclination will proceed to be bullish.
Technique: Nippon India Nifty Pharma ETF and ICICI Pru Nifty Pharma Index are the 2 funds obtainable with Nifty Pharma index as benchmark.
In case you are comfy with different metrics referring to the passive funds as talked about at first, purchase now at 19,900 and purchase extra models if the index dips to 18,600. Place stop-loss at 17,500. When the index reaches 22,000, elevate the stop-loss to twenty,000. When the index hits 23,000, alter the stop-loss to 21,500. Ebook income at 24,000.
I You may contemplate pharma sector shares as properly. Torrent Prescription drugs, Solar Pharmaceutical Industries and Biocon have the potential to be the standout performers, in line with the charts. The inventory of Torrent Prescription drugs continues to exhibit sturdy bullish momentum whereas Biocon confirmed a bullish development reversal in early 2024. Solar Pharmaceutical Industries is now exhibiting indicators of resumption of the uptrend after a correction.
Helps: 18,300 and 16,000
Resistances: 22,500 and 24,000
#sectors #bullish #charts #play