Chartist Chat: Amol Athawale of Kotak is positive about these three stocks but negative about the Nifty 50

Chartist Chat: Amol Athawale of Kotak is positive about these three stocks but negative about the Nifty 50

According to Amol Athawale, the best course of action for positional traders would be to remain with reputable front-line IT firms.

The short-term trading setup suggests that the Nifty 50 is likely to be in a poor mood as long as the market is trading below the 20-day SMA or 22,450, according to Amol Athawale, vice president of technical analysis at Kotak Securities, who spoke with Moneycontrol.

From a technical perspective, he thinks Finolex Industries is in a strong uptrend wave and that further upside is possible, pushing the stock up to Rs 315–320.

With fifteen years of technological research expertise, Amol is also optimistic about Infosys and SBI Life Insurance Company.

Should I add FMCG stocks to my portfolio at this time?

Thus far this week, the FMCG index has increased by more than 2.5 percent. Following a protracted decline, the FMCG index ultimately found support close to the 200-day SMA (simple moving average) and reversed. It is now trading comfortably above the 50 and 20-day SMA after the reversal, which is generally good.

The FMCG index's short- and medium-term textures suggest that the total FMCG basket will probably keep up its positive momentum in the foreseeable future.

Do you believe that the Nifty may find support around the lower end of the upward rising channel, which is located around 22,150 and also happens to be the 61.8 percent Fibonacci retracement, or do you believe that the index will continue to decline in the days ahead?

Selling pressure is persistently present in the market at higher levels right now. On the weekly and daily charts, there is a Double Top formation that indicates the upward trend has stalled. The short-term trading setup suggests that a bad feeling is likely to persist as long as the market is trading below the 20-day SMA, or 22,450.

Conversely, Rs 22,200–22,150 may be the traders' next support level. It is probably where the selling pressure will pick up speed. The likelihood of reaching 22,000 would brighten below 22,150.

How can you trade the Nifty 50 using F&O knowing that the weekly expiration is on Thursday?

Currently, the 50-day SMA, or 22,300, would serve as a sacred threshold for weekly option traders. Above which a single technical reversal up to 22,400–22,425 might be anticipated. However, the texture may alter below the 50-day SMA.

One may search for the Put option underneath the same. On the negative side, the traders' main support zones would be 22,200–22,150.

Have you begun investing in technology companies, which contributed to the market's decline by acting as a protective measure?

Technically, the Nifty IT index is trading close to its 200-day SMA after a protracted decline. We believe that IT companies will likely outperform in the near future if the market has created a reversal pattern.

But, given the whole picture, we think that the best course of action for positional traders would be to continue working with reputable front-line IT firms.

It seems like Finolex Industries has produced a bullish flag breakout. Do you think the stock will soon hit or surpass Rs 300?

The stock closed above the Rs 280 barrier level on Tuesday, setting a new all-time high of Rs 286.5. This is a generally good development. Technically, the stock is in a strong uptrend wave. The 20-day SMA level, or Rs. 265 for trend-following traders, would be a crucial reference point. The stock may rise over Rs 265 and reach Rs 300. The stock may rise above Rs 315–320 if further gain is sustained.

Your two best wagers for the next week, where the charts seem to be rather strong?

Infosys: Purchase | Target: Rs. 1,500/1,525 | Stop-Loss: Rs. 1,400

Following a protracted decline, the price rebounded and found support at about Rs 1,375. Following the reversal, the stock is trading comfortably above the Rs 1,400 mark, which is often a good sign. We believe that the pullback formation is likely to persist in the near future as long as the stock is trading above Rs 1,400. On the plus side, the stock may rise to Rs 1,500–1,525 in value.

SBI Life Insurance Company: Invest in | Target: Rs 1,525/1,550 | Stop-Loss: Rs 1,415

Following a brief drop, rangebound activity is being seen in the stock close to the 200-day SMA. The stock is now exhibiting bullish consolidation, and the short-term shape strongly suggests that there is a chance for a new upward rebound from the present levels.

Our opinion is that positional traders should maintain an optimistic attitude and aim for a target price of Rs 1,525–1,550 till the market closes below Rs 1,415. Fresh purchases with a stop-loss below Rs. 1,415 might be contemplated now and during any declines, if any, between Rs. 1,450 and 1,425 levels.