Gas Sector | Action Ideas: Sumeet Bagadia Explains Oil & Gas Recovery; gives 3 best trading ideas for the next 3-4 weeks

The oil and natural gas sector has outperformed over the past week with a 2.76% gain, while in a month it was up around 10%, according to Sumeet BagadiaExecutive director, Brokerage of choice.

In an interview with ETMarkets, Bagadia said investors and short-term traders may find better opportunities in the ongoing rally in the oil and gas space. Edited excerpts:

It’s been a volatile week for Indian markets, but the bears have remained in check despite seeing a pullback for a few sessions. What led to the price action?
Dalal Street has witnessed a roller coaster ride throughout the week. On Monday, Nifty opened with a loss of 292 points and closed in the red. The downward recovery also continued on Tuesday, losing 1.73%.

In between, the bulls have somewhat managed to take control of the bears. But, on Friday, once again, a massive sell-off was seen in the indices as well as in the sectors. The S&P BSE Sensex fell almost 2% while the Nifty50 fell 1.7% for the week ended April 22.



During the week, the US market also went into panic mode after the US Fed signaled that a rate hike could take place next month.

Technically, after forming the Evening Star pattern on the weekly chart, the Nifty Index formed a Doji candlestick that shows indecision among trades.

Moreover, the index also faced resistance from falling trend lines and took profits from higher levels. On the daily chart, it failed to close above the 17,200 level, indicating that traders will opt to sell higher.

The immediate support of 17,000 people has already been breached. So, the next strong support is placed around 16,800, followed by 16,600.

Short-term investors can opt for specific stocks with a positive bias. Indicators like the MACD and RSI show a negative crossover, further indicating weakness in the price action. Overall, the Nifty has support at 16,800 marks while resistance at 17,550 is followed by 17,850.

We are about to enter the F&O expiration week. We’ve seen Death Cross on both indices over the past week. Are there any specific levels investors should watch out for for Nifty and Nifty Bank?
Nifty and Nifty Bank have shown bilateral moves in the current week leading to guess who has more control – bulls or bears.

However, the Indian VIX remained below 19, despite uneven moves that dashed hopes of investors and traders alike to take a directional position.

As for the OI data, the maximum open interest on the Call side was created at the 18,000 level followed by 17,500 while on the Put side, 17,000 has a maximum open interest followed by 16,500 levels.

Bank Nifty Call OI Data suggests that maximum Open Interest is created at 37,000 followed by 36,500, while on the Put side, the maximum OI remains at 36,000 followed by 35,000.

The Nifty50 is forming a Head & Shoulder pattern on the daily chart which will be confirmed should the neckline placed around 16,800 break lower.

The 200-day simple moving average placed around 17,100 is likely to act as crucial support, and a close below the same would lead to increased selling pressure next week.

From the time cycle outlook, Nifty and Bank Nifty could see chaos until May 2-3. Additionally, indicators such as MACD and RSI suggest a slight negative crossover in the daily timeframes.

In April, FII sold shares worth Rs 29,206 crore while DII bought for Rs 21,139 crore, suggesting that upward movement is limited until this expiration.

Specifically, Nifty has support at around 16,800 followed by 16,600 and resistance is placed at 17,550 while Bank Nifty support is placed at 35,500 followed by 35,000 and resistance is at around 37,000 followed by 37,400.

Sector-wise, energy, oil and gas stocks rose while selling pressure was felt in IT and banking stocks. What led to the price action?
In a sector rotation, oil and natural gas outperformed this week with a gain of 2.76%, while in one month they were up around 10%.

The main contribution was led by Reliance Industries, followed by BPCL and IOC. Overall, commodity stocks extended their momentum on the positive side of the escalating war between Russia and Ukraine.

The expectation of higher oil prices per barrel also boosted the rally. The US Fed’s indication to raise rates in the coming month also supported the rally in oil and gas stocks. Investors and short-term traders may find better opportunities in the ongoing rally.

On the IT front, the start of the quarterly earnings session failed to impress investor expectations, led by heavyweight stocks.

The IT index fell more than 5% on a weekly basis. Bear followed its path by breaching the 32438 levels, which had been the crucial support since February 24, 2022.

Technically, the 32,000 level is the next immediate support, and if broken, we could see more selling pressure in IT stocks.

With caution, in the short to medium term, one should look for mid-cap stocks with the potential to generate decent returns in these volatile times.

The US Fed has announced an aggressive rate hike of 50 basis points in the near future. Do you think it’s priced in or that we might see further adjustments in global investors’ portfolios that could weigh on markets? FIIs withdrew more than Rs 26,000 crore from the spot segment of Indian stock markets.
Major markets around the world were in the red after aggressive and accelerated commentary on the 50 basis point rate hike from US Fed Chairman Jerome Powell.

The market was anticipating a 25 basis point rate hike and so we saw a massive sell-off in global markets.

Markets are expected to remain under pressure in the near term amid likely monetary policy tightening by global central banks and we will continue to see further adjustments in the portfolios of global investors.

Where is the smart money going? Have you seen a change in trading patterns – conservative or aggressive?
In the current environment of tense geopolitical conditions and sustained inflation, global fund flows are heading towards stable economies like the United States and Europe.

Given that the US Fed is likely to take tough action to control inflation, we are cautious about money flows to emerging markets like India.

Your 3-5 trading ideas for the next 3-4 weeks?
) Here is a list of the best trading ideas:

TVS Motor Company Ltd: Buy| LTP Rs 645 | Target Rs 700-740 | Stop Loss Rs 590 | 8% increase

On a monthly chart, the stock has formed a hammer candlestick pattern that suggests the strength of the meter. On the weekly chart, the stock gave a breakout from a falling trend line, which indicates bullish movement in the meter.

On a daily chart, the stock is trading with the support of a horizontal line that indicates the bullish course of the meter.

Additionally, the stock has traded above the 21- and 50-day moving averages, which shows a positive trend at the moment.

A Stochastic Daily Momentum indicator showed a positive crossover which adds more uptrend to the price.

Therefore, based on the technical structure above, one can initiate a long position in TVS at the current market price or a decline in the price to 635 levels can be used as a buying opportunity for the target. increase of 700 and 740.

On the other hand, support is placed at around 590 levels, which is also the stop loss on a closing basis for all long positions.

UltraTech cements: Buy| LTP Rs 6743 | Target Rs 7100-7400 | Stop Loss Rs 6500 | Up 9%

On the monthly chart, the stock has taken the support from the previous horizontal line and is holding above the same, suggesting bullish momentum in the meter.

On the daily chart, the stock forms a Cup & Handle pattern that indicates the bullish course of the meter.

Additionally, the stock has traded above the 21- and 50-day moving averages, which shows a positive trend at the moment.

A daily momentum indicator Stochastic and MACD both showed a positive cross which adds more uptrend to the price.

Therefore, based on the technical structure above, one can initiate a long position in UltraTech Cements at the current price or a drop in price to the 6700 levels can be used as a buying opportunity for the target. bullish from 7100-7400.

On the downside, support for the stock is placed at around 6500 levels, which is also your close stop loss for all long positions.

Adani Ports: Buy| LTP Rs 873 | Target Rs 960-990 | Stop Loss Rs 790 | 13% increase

On the weekly chart, the stock gave a breakout from a consolidation phase as well as on a daily time frame. The stock gave a break from a flag formation and continues to trade with a positive bias.

On a monthly chart, the stock has been trading near the all-time high and continues to trade higher, indicating that the bulls are active.

Additionally, the price also moved above the upper part of the “Bollinger Band” on a weekly time frame, suggesting that a bullish rally will continue in the near term.

A daily momentum indicator RSI and MACD both showed a positive cross which adds more uptrend to the price.

Therefore, based on the above technical structure, one can initiate a long position in

at Rs 874 or a decline in price to 860 levels can be used as a buying opportunity for the 960-990 upside target.

On the downside, support is placed at around 790 levels, so a stop loss on a closing basis of Rs 960 should be placed at lower levels.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)

Garland K. Long