F&O Talk: Tata Consultancy Services Drives IT Rally, Nifty Eyes New Highs – Insights from Madhu Bansal of The Finberg

On Friday, the stock market saw IT stocks soar after Tata Consultancy Services (TCS) exceeded revenue expectations. This rally pushed the Sensex up by 622 points (0.78%) to 80,519, and the Nifty increased by 186 points (0.77%) to 24,502. The total market capitalization of BSE-listed companies grew by Rs 1.18 lakh crore to Rs 452.36 lakh crore, though the market breadth favored the bears.

Madhu Bansal’s Market Insights

Madhu Bansal, Research Analyst and Founder of The Finberg, shared her views with ET Markets on Nifty and Bank Nifty, offering a strategy for the week.

Will Indices Consolidate After the Rally?

On Friday, Nifty closed at an all-time high, indicating continued bullish momentum. Despite the RSI indicator showing an overbought situation at 73 levels, this suggests a minor correction before the bull move continues. Watch levels for Nifty are 24,500 on the upper side and 23,400 on the lower side.

What’s Next After All-Time Highs?

If Nifty sustains above 24,600, it could reach 25,000 and 25,500 points, based on option chain analysis and Fibonacci retracement levels.

Nifty Open Interest Data

With heavy call and put writing, Nifty may trade in a defined range, leading to compressed volatility or position unwinding, potentially leading to further upside.

Is Bank Nifty Better for Trading?

Bank Nifty faces resistance at 52,600 and 53,250 levels, showing underperformance due to sectoral rotation. Nifty, with better volume and liquidity, is a better prospect.

Sectoral Insights Ahead of the Budget

• Shipbuilding and Fertilizer Stocks: Great investment opportunities due to high demand and potential subsidies.
• Railway and Defense Stocks: Overbought, suggesting a correction is a good entry point.
• Upcoming Budget Sectors: Focus on healthcare, real estate, FMCG, and infrastructure.

SEBI’s Recommendations

SEBI’s proposed changes to raise the minimum lot size of derivative contracts and limit weekly options aim to protect retail investors from significant losses.

Market Outlook for the Week

Nifty is poised to reach new heights if it sustains above current all-time high levels, aligning with Fibonacci retracement points.

Specific Strategy for Traders

• Sector Rotation: Identify stocks benefiting from this trend.
• Index Trading: A bull call strategy can protect trades during the bull move.