Kaynes shares have fallen 43% from their October high. Is a tactical rebound or more pain on the cards?
Edited excerpts from a chat with Anand James, Chief Market Strategist, Geojit Investments Limited:
After a flat week, how would you trade the market now? Would Friday’s RBI optimism carry over into Monday? Friday’s optimism stemmed from the completion of a morning star pattern that signaled a potential reversal from the downtrend that began on December 1. While the decline was brief, the reversal is also likely to be short-lived, as evidenced by Friday’s hold at 26,200, a key resistance against congestion.
Although the oscillators support a possible extension of the uptrend, we do not see enough momentum for a strong move higher. We initially favor a swing lower towards 26.085-26.065. Alternatively, a break above 26,200 could trigger further gains towards 26,460-26,550, but a sharp vertical rise is less likely.
IT was among the week’s biggest gainers. Do you see chances for more upside?
Yes, the IT sector shows strong potential for further growth. The Nifty IT has been signaling a reversal since September and recently broke above the weekly supertrend indicating strength. The weekly RSI near 60 along with the index closing above the 20-week high reinforces the positive outlook. Based on these technical cues, the index could target 39,500 in the coming weeks.
Derived data also supports this bullish view. More than 50% of underlying stocks saw short gains near the OTM put strike and long gains at the call strike. Additionally, 70% of stocks posted a long rally on Friday, while 80% posted weekly short coverage, suggesting traders are focused on further gains. Heavyweights like TCS, Infosys, HCL Tech, Wipro and Tech Mahindra are showing strong weekly charts and are expected to lead the rally towards 39,500.PSU banks were under selling pressure but recovered on Friday. Is the chart showing a fresh 52-week high again going forward?
Although the index saw a decline on Friday, the charts suggest a mixed outlook. The breakout of the wedge pattern in September and the resulting uptrend since November are losing steam. A recent dip below the rising trendline near 8,500 suggests a possible short-term trend shift, while the weekly MACD shows exhaustion candles, signaling the first signs of consolidation. Despite this, the longer-term charts still reflect underlying strength and keep the possibility of a fresh 52-week high alive.
Derivatives data on Friday showed some attempts at a recovery, with long gains and short covering in equity futures, but weekly data indicated more than half of positions still included short gains. Among individual stocks, SBI, Bank of Baroda, PNB, Union Bank, Canara Bank and Indian Bank may see sharp declines early next week, though sustainability remains uncertain. The preferred strategy is to capitalize on a potential early rise next week and remain cautious in the second half.
Kaynes ended the week down 21% on negative news. Do you see the chances of an upward bounce or is it too risky to chase a falling knife?
Kaynes is now down 43.5% from its October peak, with Friday’s 12.5% drop marking the steepest one-day drop in the period. Momentum indicators and oscillators point to a strong downtrend with no signs of bearish exhaustion, raising the risk that the decline could extend to at least the one-year low of Rs 3,825 recorded in February. That said, the severity of Friday’s drop suggests the fear may have peaked.
Aside from that view, the only previous time the stock has stretched this far from its 200-day moving average was in April, when the gap was around 25%. The stock is currently nearly 26% away from the 200-day SMA, which makes for a close watch for potential moves in the mean in the coming week. Given the contrarian nature of this view, a bearish indicator slightly below Rs 4,300 is recommended, with an initial recovery target of Rs 4,541.
Give us your best ideas for next week.
COFORGE (CMP: 1977)
View: Buy
Target: 2080-2180
SL: 1882
The stock has been in a continuous uptrend since 2020 and is currently forming a Cup and Handle pattern on the charts. It is attempting to break out of this formation, supported by the weekly RSI near 60 and the MACD above the signal line. Price action remains strong, trading well above the 20-, 50-, and 100-day moving averages, reinforcing the bullish outlook. The stock is expected to move towards Rs 2,080 and Rs 2,180 in the near term. Long positions should be protected with a stop-loss below Rs 1882.
ABC CAPITAL (CMP: 358)
View: Buy
Target: 368-377
SL: 348
The stock has maintained a strong uptrend since February 2025 and continues to show strength on both the daily and weekly charts. The weekly MACD remains above the signal line and the price is trading comfortably above the 20-, 50-, and 100-day moving averages, reinforcing the bullish outlook. The stock is expected to move towards Rs 368 and Rs 377 in the near term. All long positions should be protected with a stop loss below Rs 348.