Stocks To Buy: Indian equity market started Wednesday’s trade on a volatile note oscillating between gains and losses. S&P BSE Sensex was trading flat and hovering around the 59,000 mark while the NSE Nifty 50 index was holding above 17,550. Bank Nifty was above 38,700 while India VIX (volatility index) was at 19 levels. While a stronger home economy is offering some consolation, market participants can see the fear of uncertainty in their high volatility movements, which are being driven by weak signals from international markets, according to analysts.
Nifty Short-Term Outlook
Speaking about benchmark Nifty’s trajectory in the short term, henceforth, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd., said: “After a seller’s rally, benchmark indices saw profit-booking at higher levels. The correction was sharp and price-dominating. From the monthly highest levels, the index corrected over 650 points. however, after a sharp correction, the index took support near 20-day SMA (Simple Moving Average) and bounce back sharply. Technically, on the weekly chart, it has formed a hammer candlestick formation, which indicates further weakness in the near future. We believe a correction formation below 17,800/59,700 is likely to continue. Below 17,800, the index may again touch the level of 17,300. The further downside may also continue, which could drag the index to 17,200 or 17,000 levels.”
On the other hand, 18,000 would act as immediate resistance for the bulls. A fresh uptrend rally is possible only when the index crosses the 18,000 resistance. Above which it can go up to 18,200/18,350 levels, Chouhan said.
Buying Strategy for Investors
Chouhan said: “The data pointers on the macro front are turning hostile. The dollar index moved to a year-high at 109. Brent jumped to a level of $99.50 p/b, up from $93 p/b in the month of July and the 10-year bond yield rose to 3.04 per cent from the 2.60 per cent level. It will keep the pressure on the upside of the market. Based on the valuation metrics, Nifty is trading at 17,500 at 19 times FY24 EE, which is resisting medium-term investors from aggressively entering the market. However, the outcome of the Fed’s upcoming meeting in Jackson Hole will decide the next course of the trend for the market. In short, we are cautiously optimistic about the market and our strategy should be to buy select stocks on the declines.”
Top Stock Picks For Short-Term Gains
Rajesh Palviya, VP – Technical and Derivative Research, Axis Securities, suggests these five short-term buys.
Excel Industries Ltd. – CMP: Rs 1,413
With today’s strong gains, the stock has decisively broken out of its past four month’s consolidation zone (1390-1100) along with huge volumes. On the daily time frame, the stock formed higher tops and bottoms, representing an uptrend. Currently, the stock is well placed above its 20, 50, 100, and 200-day SMA, supporting bullish sentiments. The daily, weekly, and monthly strength indicator RSI is in bullish terrain, which signals rising strength.
Buying Range: Rs 1,410-1,400 |SL Rs 1,300 |TGT Rs 1,550-1,630
Vedanta Ltd. – CMP: Rs 264
On the daily time frame, the stock has formed higher tops and bottoms representing positive bias. The 20 and 50-day SMA positive crossover on a daily time frame signifies rising momentum. The daily and weekly strength indicator RSI is in bullish terrain, which signals rising strength. The stock is well placed above its 20 and 50-day SMA.
Buying Range: Rs 264-260 |SL Rs 248 |TGT Rs 285-290
Piramal Enterprises Ltd. – CMP: Rs 1,955
Within the past four months price consolidation has resulted in a rounding formation with a neckline level of 2030 levels. On the daily time frame, the stock has placed positively and trending higher, forming a series of higher tops and bottoms indicating bullish sentiments. The stock has recaptured its 20 and 50-day SMA and rebounded very sharply. Since the past couple of sessions, the stock is well placed above the 100-Day SMA, which reconfirms the positive trend. The daily and weekly strength indicator RSI is in bullish terrain, which signals rising strength.
Buying Range: Rs 1,960-1,940 |SL Rs 1,840 |TGT Rs 2,155-2,300
Star Paper – CMP: Rs 200
On the daily chart, the stock is on the verge of a “Cup and Handle” formation breakout. Rising volumes along with price rise signals increased participation near the breakout zone. Currently, the stock is well placed above its 20, 50, 100, and 200-day SMA, which supports bullish sentiments. The daily, weekly, and monthly strength indicator RSI is in bullish terrain, which signals rising strength.
Buying Range: Rs 200-195 |SL Rs 190 |TGT Rs 213-225
Tata Coffee – CMP: Rs 234
With the current session’s strong gains, the stock has decisively broken out of its past one-year major multiple resistance zone of 230 levels. This breakout is accompanied by huge volumes indicating increased participation. On the daily and weekly time frame, the stock is trending higher, forming a series of higher tops representing a strong up trend. The daily and weekly “band Bollinger” buy signals indicate increased momentum.
Buying Range: Rs 234-230 |SL Rs 225 |TGT Rs 250-260
Shrikant Chouhan also suggested a few short-term stock picks, namely ICICI Bank with a buy target of Rs 1,025, RIL with a buy target of Rs 2,980 and, M&M at a buy target of Rs 1,450.
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