This week is a holiday-shortened one and participants will be closely eyeing the RBI's monetary policy review meet on October 4.
Markets extended their recovery for the third successive week and gained over 2 percent amid volatility. They started on a buoyant note, as participants continued to rejoice the decision of corporate tax cuts, and firm global cues further boosted the sentiment. However, profit-taking at higher levels capped upside in the following sessions and the benchmark remained range-bound thereafter.
Meanwhile, movement on the stock-specific front kept traders busy. A mixed trend was witnessed on the sectoral indices, wherein banking, energy, financial and FMCG were the top contributors, while IT and pharma remained under pressure. In the end, the benchmark index, Nifty, settled at 11,512.40, up 2.11 percent.
This week is a holiday-shortened one and participants will be closely eyeing the RBI's monetary policy review meet on October 4. A majority expect the easing to continue, citing inflation being within the comfort zone. On the macroeconomic front, IHS Markit India Manufacturing PMI and HIS Market India Services PMI data are scheduled to be released on October 1 and October 4, respectively. Besides, auto and cement companies will announce their monthly sales figures.
After the government measures to boost the economy and market sentiments, it's now RBI’s turn to provide the needed support. We feel the Nifty has the potential to test the 11,700-11,800 zone, while the 11,350-11,250 band would act as cushion. Traders should continue with a “buy on dips ” approach but do not get carried away, as participation is still restricted largely to the quality names.
Here is the list of three stocks for near-term returns:
UPL: Buy | Target: Rs 630 | Stop-loss: Rs 585 | Return: 5 percent
UPL has been consolidating around the support zone of multiple moving averages on the daily chart and witnessed a breakout from the same today, i.e., September 30. The chart pattern, combined with the positioning of indicators, is pointing towards a steady rise from hereon.
We thus advise initiating fresh longs within Rs 596-600. It closed at Rs 603.95 on September 30, 2019.
Divis Laboratories: Buy | Target: Rs 1,780 | Stop-loss: Rs 1,600 | Return: 6.9 percent
We are seeing a mixed trend in pharma index and DIVIS LAB has been witnessing consolidation amid volatility, while holding firmly above the support zone of the long-term moving average (200 EMA) on the daily chart. Indications are in favor of a breakout in the near future.
We advise creating fresh longs in the given range of Rs 1,655-1,665. It closed at Rs 1,665.50 on September 30, 2019.
Bharat Heavy Electricals: Sell October Futures | Target: Rs 43 | Stop-loss: Rs 52 | Return: (Downside 12.2 percent)
BHEL has been trading in a downtrend for the last several years and still there’s no change in the trend. Though it had made several attempts in the past in vain, it failed to surpass the critical hurdles and resumed its downtrend. Currently, it is trading on the verge of fresh breakdown from a consolidation range.
We thus suggest initiating fresh shorts in the given range of Rs 49-50. It closed at Rs 48.50 on September 30, 2019.
(The author is VP Research at Religare Broking.)Disclaimer: 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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.