The rally witnessed in Indian stocks recently appears it has further legs to carry on, believes renowned chartist Daryl Guppy.
In an interview with CNBC-TV18, Guppy said he did not see any “end-of-trend patterns” on both the Sensex and the Nifty and held out a target of 30,500 and 9,300, respectively, on both. “There is very low probability of the start of a downside.”
The uptrend will likely be supported by a continuing share rally in key US indices: the technical analyst said the S&P 500 may test 2,150 in the near term.
Crude, which has halved in the past six months is likely to stay in the USD 38-48 per barrel range but a breakdown below USD 38 could result in a ‘worst-case’ scenario of USD 26, according to Guppy.
On currencies, he believes the rupee’s next target is at 61.60 following which it could go on to test 58 to the dollar. “The appreciation is intact and the rupee is unlikely to test 63 on the downside.”
The euro, which has plunged against the dollar, is likely to test 1.07 though an immediate bounceback from current 1.17 levels may be due in the near term, he added.
Below is the transcript of Daryl Guppy’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: It’s been great going for the Indian market but what is the prognosis for 2015?
A: What we are seeing with the Sensex and the Nifty, at the moment there is consolidation developing, with Sensex about 27,000 and 28,500. If we can take width of that consolidation projected upwards which gives an upside target around 30,500. Therefore, what we are looking for is a breakout on the upside. This long-term Guppy Multiple Moving Average shows that this is a strong established trend. When the market drifts back, the buyers are coming in and investors are confident for the future. So we are looking for more upside both for the Nifty and on the Sensex.
Latha: Any levels when you say upside bias?
A: Looking at Nifty for instance, we have got an upside target around 9,300 at this stage.
Latha: Is it that the downside has moved up for Sensex and Nifty?
A: Not so much because Nifty got very strong support level, sitting at 8,000. We have not even tested that to a significant extent. We have got retreat behaviour between 9,000 and 8,600. A break above 8,600 gives us 9,300 targets. The strength of the Guppy Multiple Moving Average suggest there is a very low probability of a downtrend break, in fact there is no end of uptrend patterns that are appearing in the market.
Latha: Can you give us trends for crude either Nymex or Brent and for dollar rupee?
A: If you are looking at oil, downside target for oil at worst case is USD 26 per bbl but what we have got at the moment is consolidation between USD 38 per bbl and USD 48 per bbl. So we are looking for a longer term consolidation of USD 38 per bbl and USD 48 per bbl level. If USD 38 per bbl fails to hold then it gives us USD 26 per bbl downside target but at the moment we are expecting that USD 38 per bbl-USD 48 per bbl level to hold.
In terms of rupee has fallen below that major uptrend. Once we drop below 62/USD – that’s a significant break to the uptrend that’s been in place since June last year. Our downside target for the rupee is around 61-60/USD at this point in time, if that fails to hold then we can retest the 58/USD. At this stage the uptrend is still in place but that uptrend line will now act as resistance level, so rupee is unlikely to go much above 63/USD.
Sonia: Do you track the Bank Nifty and if the Nifty moves towards 9,300 levels, do you think it could be lead by the banks?
A: I am not worried about the sector leadership in this particular instance. I am tracking the broader index and there are individual opportunities within each of those areas. The banking sector is likely to follow, it’s one of the primary components of the Nifty – that’s the one we look at.