Pidilite, TCS, Havells, L&T Fin to show strength: Bhavin Mehta

By Bhavin Mehta, VP, Derivatives Strategist, Dolat CapitalWhere are we: Nifty started the year on a positive note amidst global tensions cooling off, went on to make higher highs and later met with supply in 12,350-12,400 range. We have seen a sharp reversal in the market recently on the back of concerns arising from Coronavirus followed by budget on Saturday that didn’t meet the expectations of the participants. This also coincided with weakness in Bank Nifty combined with MACD on daily charts now below neutral line while RSI also below 50 indicates weakness creeping in. Our view on Bank Nifty had been on the negative side for the last two weeks and continue to maintain the same.What is in store: We believe, the impact of the budget should last at least for the next two-three trading sessions. Participants will later look at the global market and Q4 earnings for fresh directions. Technically, for Nifty 12000 should now emerge as major supply while 11,500-11,400 on the downside should be crucial.All eyes will be on India VIX and a sustained move below 15 could indicate fresh strength back in the market.What could traders do: Notably, both January and February usually are biased negatively. Since 2007, the month of February has seen negative returns 70 per cent of the time with average loss at negative 1.2 per cent for Nifty. Notable trend change is usually seen from mid/late March. We believe this should hold true even for this quarter. Post the recent the developments will be looking to execute the following pairs: Buy TCS, Bharti Airtel and, HCL Technologies; and sell Pidilite, L&T Finance and Havells.

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