Hot Stocks | Here's why UBL, GAIL can give up to 12% return in short term

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Sameet Chavan

It was a great start for the new trading week as well as the month.

In May, there was a gap down opening on the first day and on June 1, that downside gap area was filled.

Our markets continued their upward trajectory to enter a five-digit territory beyond 10,000 after nearly three months.

After a good headstart, markets took a pause and saw some profit-booking for a couple of days. But without much damage, the buying re-emerged at lower levels on June 5 to conclude the week with a whopping 6 percent gains from the previous weekly close.

Technically, last Monday’s gap up opening turned out to be a game-changer for the bulls. Because After the April month's ecstatic move, the month of May started with some negativity which got reversed with such a bounce.

Since the previous gap was filled by yet another gap, this time bears got caught completely on the wrong foot.

Now looking at the current setup, we remain upbeat as long as Nifty holds and sustains 9,900.

Since the recent move was mainly propelled by the banking space, we were convinced with the rally in the last couple of weeks.

Now along with banking, we could see the contribution from the broader market too, indicating signs of a robust move.

Last week, although we struggled at 10,200, the positioning of RSI smoothened which indicates the possibility of extending this move towards 10,500-10,700 levels.

Hence, traders are advised to stay on the positive side as long as 9,900 is being held.

If we look at two major global indices, Dow Jones and DAX, both have retraced almost 78 percent from the March lows but we are trading tad above 50 percent.

Hence, if we have to see the catch-up move, the mentioned levels are very much on cards now.

Here are two trading ideas for the short-term.

United Breweries (UBL) | Buy | LTP: Rs 1,022 | Target price: Rs 1,108 – 1,140 | Stop loss: Rs 947 | Upside: 12%

The entire liquor space has undergone a massive price correction over the last few months.

Recently, we witnessed a long consolidation in the stock prices around its multi-year supports.

We can now interpret this as a base building process and the stock is now gearing up to give a thrust from this congestion phase.

We could witness some early signs of it as the stock prices surged considerably in the last couple of hours last Friday.

This is backed by sizable volumes and hence provides credence to the move.

GAIL (India) | Buy | LTP: Rs 98.10 | Target price: Rs 105-107 | Stop loss: Rs 94.40 | Upside: 9%

This PSU stock has miserably failed to live up to its investors’ expectations over the last 15-18 months now.

However, the recent price move has been a bit encouraging. Although there is no significant move is being witnessed, the overall structure looks promising.

With its gradual upward rally, the stock has been consistent and has confirmed a breakout from the sturdy wall around Rs 93.

Despite the lack of follow-up buying, the stock has been defending its 89-day EMA on the daily chart.

(The author is Chief Technical & Derivatives Analyst at Angel Broking)

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. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.