Avoid taking aggressive positions on either side of Nifty

By Sameet Chavan, Chief Analyst ­ Technical & Derivatives, Angel Broking

There are chances of the Nifty sliding towards 9,640­9,620 levels, or even below that in the coming weeks, before it moves up to 10,000 and 10,400 levels.

Sectors such as energy, private banks, NBFCs and tyres continue to display steady strength, and metal stocks, such as Tata Steel, Hindalco and Vedanta, could offer 5-7 per cent returns in the near term.

Where are we?
If we summarise the overall price development in the past two weeks, it seems the index has slipped into a consolidation mode.Although, Wednesday's smart recovery in the latter half was slightly on unexpected lines, we continue to be cautious.

What is in store?
The hourly chart shows the recent rally is still a bounce-back move towards the 'Upward Sloping Trend Line' level of 9,855, which coincides with the '89 EMA'. In addition, the higher degree (weekly) chart is not very encouraging, as we saw some distortion in the penultimate week.

Having said that, we must accept that though markets are on choppy, they are not correcting in a big way. Our sense is, the market is not so heavy at the moment, and therefore, we are experiencing shallow corrections.

Looking at the recent price action along with the negative placement of the `RSISmoothened' on the weekly time frame, we expect the index to consolidate for a while.

But within this, it is likely to trade with a negative bias.What could investors do? Directionally speaking, we would expect the Nifty to slide towards the daily '89-EMA' level of 9,640­9,620 and even below that in the coming weeks, whereas, in the upward direction, crossing the 10,000 mark will be a daunting task in the near term.

Traders are advised not to get carried away by this bounce-back as such moves in a consolidation phase can be deceptive at times. At this juncture, a prudent strategy would be to keep tracking above mentioned levels and following a stock centric approach.