CLSA's Laurence Balanco expects short-term market volatility, sees Nifty support at 21,000-21,300

Laurence Balanco from CLSA has observed a slowdown in the upside momentum of the Nifty 50 index and expects a pause and consolidation in the benchmark before any further upmove.

In a conversation with CNBC-TV18, Balanco said the key levels for the market are identified between 21,000 to 21,300 levels. While 21,300 is the 50-day average, 21,000 is the lows made in December and early January, he noted.

Balanco believes a breach below 21,000 points towards a deeper correction, with the next support zone around 19,800 to 20,000, aligning with previous highs.

"But at this stage, looking at how the markets trended, it's taken the time based correction, meaning you go sideways in a trading range. So that would be our base case," he said.

 

Balanco also discussed his outlook on specific stocks. HDFC Bank, he said, has declined significantly from its three-year trading range, adding that “A strong support comes through at ₹1,260-1,300 area – that is the bottom end of the three-year trading range, but we do expect to see a test of that level.”

In contrast, Reliance Industries has surpassed a two-year trading range, and CLSA has set an optimistic target of ₹3,400-3,500 per share for the company. Additionally, CLSA anticipates robust momentum in stocks such as Tata Motors.

| Trade Setup for February 5: Has Nifty entered a sustained upmove again after a new record?

The Nifty50 was trading almost flat at 2.35 pm at 21,851 points. Despite the index reaching a new peak of 22,126 on February 9, a day after Budget 2024, the index was unable to sustain the levels, subsequently retreating by 170 points to conclude at the 21,850 mark. All eyes are now on the Reserve Bank of India's monetary policy scheduled later this week.

Also Read | Tata Motors hits record high to become top Nifty 50 gainer, analysts expect stock to rally up to ₹1100

For more details, watch the accompanying video