Crucial support at 9,000; 3 breakout buys that can give 11-15% returns

For the coming week, 9,000 will act as the key support level to hold the market and 9,450 and 9,600 will be the key resistance levels to watch out for, Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, said in an interview with Moneycontrol’s Kshitij Anand. Here are the edited excerpts from the interview:Q. What are the main reasons for the D-street not liking the fine print of the Rs 20 lakh crore stimulus package announced by the Centre?A. Optimism over the economic package announced by the government was offset by the sell-off in the global markets. The fall in the market was mainly on the back of the negative global cues as the US Federal Reserve warned of a prolonged recession in the US economy after the coronavirus outbreak fades. The announcements made by Finance Minister Nirmala Sitharaman were mainly on MSME relief schemes which addressed the liquidity issues in the system. The markets would cheer only if there is something to drive growth in the economy, propel consumption, or investments. Q. Nifty recorded a negative return for the week ended May 15. What led to the fall?A. Globally, indices traded on a bearish note as investors remained cautious amid growing second coronavirus wave fears. Further, the World Health Organization (WHO)'s warning that the virus "may never go away" also kept investors sentiments at the edge. Federal Reserve's comments about the current state of the US economy also kept market sentiments down. The actual problem of COVID-19 and economic slowdown is still persisting and global markets are once again witnessing sell-off. In such a situation, the Indian market cannot remain in isolation. Q. For this week as well, both mid & small-cap indices outperformed. Can we say that smart money has started chasing a broader market? Or the move cannot be trusted?A. This was the first week after the COVID-19 pandemic started in which mid and smallcaps moved inversely with benchmark index Nifty50. Midcap closed with an overall gain of 2.28 percent while the benchmark index, Nifty-50 closed with negative note. It is very difficult to say that when the world economy will be bouncing back so currently this move cannot be trusted with the ongoing COVID-19 pandemic situation. Q. The index is continuously facing the resistance around the 9,400 level. Do you think we could retest March lows again?A. The market closed negative for the second consecutive week. During the week, the market has jumped as much as 3.6 percent near to its resistance range after the announcement of Rs 20 lakh crore on May 13. However, it declined, from the high and closed with the loss of over 1 percent as most of the announcements came in the form of credit guarantees. Technically, benchmark Nifty50 has ended its positive rally near to its 50 percent retracement. The decline in oil prices is wonderful for us, as India is a big importer of oil. Currently, it is highly improbable that the market would retest March lows again. Q. Any important events which investors should watch out for in the coming week? Also, which important levels on the Nifty should one track?A. The government is preparing to announce the rules for relaxation in lockdown 4.0 to start the economic activities, especially in the green and orange zones. The continuous announcements by the finance minister by focusing on various sectors should be watched by the investors. The number of COVID-19 cases per day has been increasing continuously in India. So, how is the government planning to reduce the number and, at the same time give relaxation so that economic activities restart? Oxford University has passed the first hurdle of developing a coronavirus vaccine. The trials have shown some promising results. Any further development in the vaccine will have a huge impact on the market. The Indian pharma companies Cipla and Jubilant Life Sciences had signed the voluntary agreement with US pharmacy company Gilead for manufacturing of Remdesivir which is promising some better results than generic medicine where India is dependent upon. On May 15, Nifty closed down by 5.90 points or 0.06 percent at 9,136.85. With Nifty closing about its psychological level 9,100, we can expect market open in the positive or flat note on May 18. For the coming week, 9,000 will act as the key support level to hold the market, and 9,450 and 9,600 will be the key resistance to watch out for. Q. Any stocks breakout buys which investors could look at in the coming week?A. Here is a list of top three stocks: 1) Amara Raja Batteries: Buy | LTP: Rs 572 | Target: Rs 635 | Stop Loss: Rs 540 | Upside 11 percent We recommend buying Amara Raja above Rs 586 with a stop loss of Rs 540 and a target of Rs 635. On the weekly chart, the stock had been consolidating within the range and with the automobile companies started operation it might help the stock to give good breakout. 2) Adani Ports: Buy | LTP: Rs 309 | Target: Rs 355 | Stop Loss: Rs 278| Upside 15 percent We recommend buying Adani Ports above 315 with a stop loss of 278 and a target of 355. The stock has been bouncing back from its lowest point and has been recording positive returns for the past three weeks. 3) Jubilant FoodWorks: Buy | LTP: Rs 1,668 | Target: Rs 1,850 | Stop Loss: Rs 1,650 | Upside 11 percent We recommend buying above 1,740 with a stop loss of 1,650 and a target of 1,850. On the daily chart, the stock had been trading above the moving average and a breakout above 1,740 could fuel good momentum in the stock. Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. 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