Steel, realty, IT look attractive for long-term investors

Despite heavy volatility, the Nifty futures were able to hold above the technically crucial level of 2,800, ending the week at 2,934.

For the upcoming week, bulls can maintain the 20-Day Moving Average (DMA) i.e. 2,750 as a stop loss on their long positions. The technical charts indicate that the index will attempt to cross 2,980 in the coming week. If this level is surpassed, the index may touch the Fibonacci retracement level of 3,172 in the medium-term.

The Fibonacci retracement support levels are at 2,807 and 2,761, and the resistance is at 2,966 and 3,172, respectively.

Symmetric Triangle

The symmetric triangle breakout on the Nifty above 2,800 on Monday tested its sustainability around 2,960 levels. Open interest (OI) build-up appears to favour the bulls in the past three trading sessions due to the build-up of long positions.

In the short-term, the Nifty can trade in a narrow range with a positive bias. If the Nifty fails to clear 2,970 levels, which we believe to be a breakout level for the coming week, a volatile trading range could be established between 2,740-2,960. In the medium-term, the same level of 2,970 can act as a major resistance.

The current levels are attractive for long-term investors, as sectors like steel, realty and technology have corrected more than 60% from their peaks and retraced 15% from their bottoms. This forms a good base for a long-term uptrend. Frontline stocks like Tata Steel, SAIL, Sterlite, Satyam and Infosys can be looked at on declines.

Pravin Kumar, Technical Analysts at ULJK Securities