After significant correction of more than 6 percent in the previous two straight weeks, the market rebounded sharply with the Nifty50 climbing above 17,500 mark in the week ended February 4 as the government presented a growth-oriented Budget. Towards the end, however, the focus had shifted to global cues that brought in some kind of profit-booking.
Experts feel the ongoing momentum, if it sustains and global cues support, can take the Nifty50 towards the 18,000 mark, with crucial support around the 17,240 levels.
The Nifty50 rose 2.4 percent to close at 17,516.30, backed by across-the-board buying. The broader markets also participated in the run with the Nifty Midcap 100 and Smallcap 100 indices climbing nearly 2 percent each.
“We did not get carried away by this small profit-booking (seen in the last two days of last week), rather it is likely to provide an excellent trading opportunity for traders who missed the move due to a sharp recovery. This view remains valid as long as we hold sacrosanct support of 17,240 on a closing basis,” says Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One.
On the higher side, he feels 17,700 – 17,800 are the immediate levels to watch out for. “If global markets support, we may see the Nifty surpassing these hurdles to move towards the 18,000 mark.”
The only disappointing factor last week was the underperformance of individual stocks. Generally, in a quiet market, individual themes continue to shine; but it was clearly missing in the latter half of last week, says Chavan who hopes this picture changes and traders would find ample of opportunities to trade in the broader market.
Here are top 10 trading ideas by experts for the next 3-4 weeks. Returns are based on the February 4 closing prices:
Expert: Ruchit Jain, Lead Research at 5paisa.com
Hindustan Copper: Buy | LTP: Rs 137.70 | Stop-Loss: Rs 129.50 | Target: Rs 152 | Return: 10.4 percent
The Dollar Index (DXY) has seen a sharp reversal in this week and is implying a short-term bearish trend. The metals space has a negative correction with the dollar index and a negative trend in the DXY should support the metal stocks.
Hindustan Copper has recently seen a long consolidation around its 200-day EMA (exponential moving average) and now the stock has witnessed a buying interest. This can be seen by the rising volumes in the counter along with the rising stock prices and the prices have even given a breakout from its consolidation phase.
The RSI (relative strength index) oscillator indicates a positive momentum and hence we expect the stock to continue its up move in the short term.
Traders can look to trade with a positive bias and buy in the range of Rs 137-134 for potential targets of Rs 146 and Rs 152. One can place a stop-loss below Rs 129.50 on long positions.
VRL Logistics: Buy | LTP: Rs 530.15 | Stop-Loss: Rs 490 | Target: Rs 572 | Return: 7.9 percent
The stock has been forming a ‘Higher Top Higher Bottom’ structure on the weekly charts and is thus in an uptrend. In the last couple of months, the stock went through a time-wise correction and prices have given a breakout from this consolidation this week.
In the last three sessions, the stock price up move was supported by good volumes which indicate that the stock has resumed its broader uptrend. The breakout zone of Rs 510-505 should now become a support on any declines and hence, short-term traders can adopt a buy-on-dip strategy in the stock.
Thus, traders can look to trade with a positive bias and buy in the range of Rs 520-515 for potential targets of Rs 550 and Rs 572 in next 3-4 weeks. One can place a stop-loss below Rs 490 on long positions.
IndusInd Bank: Buy | LTP: Rs 956.05 | Stop-Loss: Rs 920 | Target: Rs 1,016 | Return: 6.3 percent
The banking space has witnessed a decent outperformance in last one month. Stocks within this sector are witnessing good buying interest. IndusInd Bank has underperformed its peers in terms of stock price performance recently, but we witnessed decent buying interest in the stock this week and the stock has given a breakout above its resistance.
The daily price chart resembles a ‘Cup and Handle’ pattern and a breakout with good volumes indicates probability of an up move in the stock in the near term.
Thus, traders can look to trade with a positive bias and buy in the range of Rs 955-950 for a potential target of Rs 1,016 in next 3-4 weeks. One can place a stop-loss below Rs 920 on long positions.
Expert: Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities
TCS: Buy | LTP: Rs 3,814.90 | Stop-Loss: Rs 3,700 | Target: Rs 3,900-4,000 | Return: 5 percent
The stock is in pullback mode after hitting a low of Rs 3,625. It was at Rs 4,040 when the company announced buy-back of shares and from there the stock fell to Rs 3,625.
The stock is in the middle of a downtrend. In the pullback mode, the stock may repeat the target of Rs 3,900-4,000. Buy half at current levels that are close to Rs 3,800 and the rest buy more downside at Rs 3,750. Place stop-loss at Rs 3,700.
LIC Housing Finance: Buy | LTP: Rs 394.85 | Stop-Loss: Rs 370 | Target: Rs 450-460 | Return: 16.5 percent
The stock has made a strong price break out after forming a falling wedge consolidation, which is positive for it. The break out is decisive and depending on the formation, it could extend to Rs 450-460 in the next few weeks.
The strategy should be to buy partly at current levels and on the downside at Rs 385 levels. Protect the trading long position with the final stop-loss at Rs 370.
Sumitomo Chemical: Buy | LTP: Rs 418.45 | Stop-Loss: Rs 380 | Target: Rs 440-460 | Return: 10 percent
The stock was consolidating below the Rs 400 level for quite a period, however, after the strong quarterly numbers, the stock has managed to cross it with a gap and decisive volume.
Technically, it should surpass the previous high, which is at Rs 460, in the medium term. However, our strategy should be to buy some at the current levels and balance on the dips with the final stop-loss at Rs 380.
Expert: Vinay Rajani, Technical Research Analyst at HDFC Securities
DCM Shriram: Buy | LTP: Rs 1,191.70 | Stop-Loss: Rs 1,140 | Target: Rs 1,380 | Return: 15.8 percent
The stock has been forming higher tops and higher bottoms on daily charts. It is placed above all important moving averages, which indicates bullish trend on all time frames. The stock has broken out from downward sloping trend line, adjoining the previous swing highs on daily chart.
The stock price has broken out from bullish ‘flag’ pattern on the daily charts. Price breakout was accompanied with rising volumes. Indicators and oscillators are showing strength in the current uptrend. Sugar sector has been outperforming for last couple of months
VRL Logistics: Buy | LTP: Rs 530.15 | Stop-Loss: Rs 500 | Target: Rs 595 | Return: 12 percent
The stock has broken out from the consolidation, which held for previous 14 months. The recent breakout can be considered as a horizontal channel breakout on the weekly charts.
Price breakout is accompanied with jump in volumes. Indicators and oscillators have turned bullish on daily and weekly charts. Stock price has been forming higher tops and higher bottoms on the daily charts.
Suven Pharmaceuticals: Buy | LTP: Rs 558.95 | Stop-Loss: Rs 525 | Target: Rs 630 | Return: 13 percent
The stock price has broken out from bullish ‘flag’ pattern on the daily chart. It has also surpassed the crucial resistance derived from downward sloping trend line on the daily charts.
The price breakout is accompanied with a rise in volumes. Indicators and Oscillators have turned bullish on the daily and weekly charts. The stock is trading above its 20, 50, 100 and 200 days EMA (exponential moving average). Primary trend of the stock has been bullish with higher tops and higher bottoms.
Expert: Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One
Cholamandalam Investment and Finance: Buy | LTP: Rs 675.70 | Stop-Loss: Rs 640 | Target: Rs 732 | Return: 8.3 percent
This stock has seen a significant up move in the last week and was among the outperformers from the financial space. The stock has seen a decisive volume-based breakout in the previous trading session and is firmly poised to enter the unchartered terrain.
Recent consolidation followed by a breakout in the price action increases the possibility of unfolding the next leg of the rally. We recommend buying this stock for a trading target of Rs 732. The stop-loss can be placed at Rs 640.
Biocon: Buy | LTP: Rs 391.65 | Stop-Loss: Rs 376.80 | Target: Rs 418 | Return: 6.7 percent
During the entire calendar year 2021, this stock did not well and has underperformed its most of the peer counters by a fair margin. Now the way prices are behaving around its sacrosanct supports, it’s an indication of change of tide on short to medium term charts.
With last week’s rally, we can see a breakout happening from a ‘triangle’ pattern which has strengthened its weekly time frame. In addition, the volumes are supportive along with the positive placement of key moving averages. Hence, traders can look to buy for a near term target of Rs 418. The stop-loss can be placed at Rs 376.80.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
