Vikas Jain
Nifty has failed to cross the month’s opening near 9,535 convincingly despite the announcement of a strong economic package and pushed lower to trade back near the lows.
We believe the positive momentum in the broader market will be only above 9,500 and a breakdown of 9,000 would put further pressure on the index.
Among the index heavyweights, there is an absence of a leader stock or any sector leading the up move in the current expiry, so we believe the upside is capped on the higher side.
The first round of stimulus announcements failed to cheer investors and the market would now wait for the complete announcements and lockdown 4.0 details for the next move.
Nifty50 is down by 7.3 percent while Bank Nifty is down by 11.5 percent from the last expiry. Among other sectors Realty, Metals and FMCG declined by 6 percent on an average while IT and Energy declined by 5 percent each to date.
Auto and pharma are outperforming the broader markets with a decline of just 1.7 percent compared to sharp weakness in headline indices.
India VIX has gained 12 percent and crossover of 45 levels would increase the volatility in broader markets as a lot of news flow is awaited in the next few days.
Here are three stock ideas for the next 3-4 weeks:
ACC | Sell | LTP: Rs 1,190.60 | Target price: Rs 1,080 | Stop loss: Rs 1,250 | Downside: 9%
The stock has witnessed a sharp up move from lower levels and made a double top on daily charts in range of Rs 1,240-1,250.
Twin Doji candles and breakdown of the short term average will see a sharp correction to test the lower range.
HCL Tech | Sell | LTP: Rs 515 | Target price: Rs 470 | Stop loss: Rs 550 | Downside: 9%
The stock has made multiple tops near its 200-day average and witnessing correction from higher levels.
Multiple resistances on weekly charts near the long term average also cap the upside.
The RSI is cutting downwards from the top and the sector in pressure confirms a down move from the current levels.
The stock has completed its one-month corrective phase both price-wise and time-wise, trading sideways to positive over the last few days.
On the lower side, the stock has witnessed large volumes with positive price pullbacks and we believe the stock will again resume its uptrend.
(The author is Senior Research Analyst at Reliance Securities)
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