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#39;Metal stocks due for short covering; JSW Tata Steel good long-term bets#39;

November 30
15:28 2018

Arpan Shah

Monarch Networth Capital

The Nifty opened with a gap up on expiry day November 29 and finally closed above the 200-day moving average with a strong bullish candle. The index has been facing resistance at this level since last many days but now this 10,700 levels will act as support going ahead.

Any dip towards this level will be a buying opportunity on the index front. On the upside, it can go till 11,000 where it may find some supply pressure.

Nifty has given nearly 4.7 percent positive returns in November month so December can be sideways to consolidation month.

While Nifty has given strong returns, Nifty Midcap index has only given 1 percent return in the month. So in December series, individual midcap stocks can perform well and they can outperform the market.

IT stocks that have been under selling pressure saw sharp rebound in last 2-3 days. IT index stocks have bounced back from strong support zone and now any dip towards those lows will become a buying opportunity. We are recommending buying TCS and Infosys, which are leaders of this sector, on dips.

Bank Nifty is stronger than the Nifty and it has higher probability of going up. It can reach till 27,500 zone, while on the downside, 26,500 will act as a support. Large cap banking stocks like ICICI Bank can take the lead and help support the Bank Nifty in December series.

Metal stocks which have been under selling pressure for last many days are due for short covering. Stocks like JSW Steel and Tata Steel are good bet on the long side.

Here is the list of five stocks which could return 6-15 percent:

RBL Bank |  Rating: Buy | Target: Rs 590 | Stop loss: Rs 520 | Return: 8.2%

It has taken support at its 50 and 200-day moving average (SMA) and bounced back sharply from that level. After minor consolidation at current level it can resume its upside and head towards Rs 600 levels.

Canara Bank | Rating: Buy | Target: Rs 300 | Stop loss: Rs 249 | Return: 14.5%

It has crossed its 200-day moving average and sustaining above this level. It has also given breakout form cup & handle formation.

Tata Steel | Rating: Buy | Target: Rs 565 | Stop loss: Rs 505 | Return: 6%

Metal stock has seen sharp selling pressure in last few days and they are trading in oversold territory. It is showing signs of reversal on the daily chart. We can see sharp short covering in coming days.

Escorts | Rating: Buy | Target: Rs 750 | Stop loss: Rs 640 | Return: 7%

It has broken out from small consolidation and starting a new upside rally. Momentum indicators are also showing positive momentum.

Dr Reddy’s Labs | Rating: Buy | Target: Rs 2,850 | Stop loss: Rs 2,550 | Return: 7.5%

It has been consolidating in the Rs 2,450-2,650 range since last many days, but yesterday it has broken above this range with momentum indicator turning positive. It can outperform other pharma stocks in coming days.

Disclosure: Analyst does not have any direct or indirect financial interest nor any other material conflict of interest at the time of stock recommendation in the subject company. He does not have actual/beneficial ownership of one percent or more securities of the subject company. He does not own any stocks however his relatives might own few of the stocks in their portfolio.

Disclaimer: The author is Research Analyst, Monarch Networth Capital. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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