Next 2 weeks can be difficult; Nifty may drop to 11,100: Kotak Securities

For positional traders or medium-term investors’, our advice would be to buy in select largecap companies between 11300 and 11100 levels.

At the end of the last week, Nifty fell nearly 3 percent from the highest point of the week. The broader market also suffered.

Nifty giants like Reliance Industries and HDFC Bank have reported in-line quarterly numbers, which will minimize the downside risk for the market in the medium-term.

This week the focus will be on companies such as HUL, ICICI Bank, Maruti Suzuki and Tata Motors, which are part of Nifty and related to consumption sectors.

Nifty fell from 11,700 to 11,400 in just two days largely due to selling from foreign investors. The index closed below the 11,460, which was one more lower-low for the market since June 2019.

A cluster of major supports for Nifty is placed between 11,320-11,280. Around 11,300, Fibonacci ratios and price extensions are going to provide significant support to the market in the near term.

Failure to do so would result in a quick drop to 11,100, which was the previous lowest level for Nifty before the outcome of General Elections 2019.

Since February 2016, any bearish trend has lasted for a maximum of two months on a closing basis. We are expecting the market to bottom out in the next two weeks. After that, we are expecting a gradual pull back to erase recent losses of Nifty that might last up to two months.

As per time theory, August and September should be positive months for the market, however, coming two weeks would be equally difficult for investors.

We could even see the levels of 11,100 on Nifty and if it happens then it would big drag for indices in recent times.

On the higher side, on an immediate basis, 11,500-11,550 will act as a major barrier for the market and in case Nifty climbs above these levels then 11,800-11,850 would be the next resistance levels to watch out in the next two months.

For traders, our advice is to follow levels. For positional traders or medium-term investors, our advice would be to buy select largecap stocks between 11,300 and 11,100.

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