The Indian market gained by 1.24% in April due to strong local fund buying, according to a report by Nirmal Bang. Domestic funds took advantage of March’s correction to invest excess cash and continued buying in April, counteracting foreign institutional investors’ (FIIs) selling.
The market may remain volatile in the near term due to the upcoming General Election outcome expected in early June. Other factors like a potential US slowdown, mixed corporate results in India, and domestic fund support have led Nirmal Bang to predict the Nifty will trade in the range of 22,000-23,000 for the May series.
Technical View
The brokerage pointed out that the Nifty rallied strongly in the first week of April, reaching a lifetime high of 22,775.70, however, after hitting an all-time high, the Bulls were unable to sustain their gains at higher levels. This shift triggered profit booking, or a correction, of almost 1,000 points.
Technically, Nirmal Bang noted that the Nifty faces strong resistance between 22,640 and 22,700. If it manages to close above 22,700 for two consecutive trading sessions, this could pave the way for an upward rally towards 23,000/23,300 levels. Meanwhile, on the downside, the Nifty has strong support at 22,200, its 50-Day Moving Average. If it fails to hold above this level on a closing basis, it could see further selling pressure, potentially pushing the Nifty down to 21,800-21,600, predicted Nirmal Bang.
Furthermore, the daily momentum indicator, RSI, shows strength, hinting at a potential near-term uptrend. Traders should avoid aggressive short positions and consider buying opportunities on dips, as these could strengthen the Nifty, it advised.
Amid this backdrop, the brokerage has come out with 2 technical picks for the current month (May). Here’s what it says:
Indian Energy Exchange (IEX) - BUY IEX above ₹157.40, ADD on dips at ₹150 for a target of ₹185 with a strict stop loss of ₹144.
As per the brokerage, technically, the weekly chart suggests that the stock has given the breakout of a downward-sloping channel suggesting a potential upmove in the near term. It is well placed above all the important moving averages on a closing basis. An interesting fact is that its price is rising along with decent volume indicating strength. Momentum indicator RSI is showing strength in its weekly charts, it said.
The stock has lost over 7 percent in the last 1 year and over 10 percent in 2024 YTD. The scrip has shed almost 4 percent in May so far after an over 16 percent jump in April. However, it was in the red in the first 3 months of the year, down 12 percent in January, 3.7 percent in February and 5.5 percent in March.
City Union Bank (CUB) – BUY CUB above ₹160, ADD on dips at ₹154 for a target of ₹185 with a strict stop loss of ₹148.
“CUB has given a breakout of the cup and handle formation on weekly charts. The daily chart suggests that the stock has given the flag pattern breakout with volume indicating a potential upmove in the near term. Stock is well placed above all the important moving averages and a positive average crossover is seen. Momentum Indicator such as RSI is showing a positive crossover,” explained the brokerage.
The stock has risen over 14 percent in the last 1 year and over 4 percent in 2024 YTD. The scrip has lost over 3 percent in May so far after a 19 percent jump in April. Meanwhile, it was completely flat in March. However, the stock was in the red in the first 2 months of the year, down almost 3 percent in January and 6.7 percent in February.