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HUL, JSW Steel, UltraTech Cements breakout buys for this week: Sumeet Bagadia

Technically, 9000-9500 is a trading range in which the Nifty index has been trading for the last many days. If the index gives the breakout of the same then 500-800 points of movement will be there on either side direction.

May 18, 2020 / 07:31 AM IST
 
 
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Technically, 9,000-9,500 is a range in which the Nifty index has been trading for the last few days. If the index gives a breakout from here, then 500-800 points movement can be there on either side direction, Sumeet Bagadia, Executive Director at Choice Broking, said in an interview with Moneycontrol’s Kshitij Anand.

Edited excerpts:

Q) What are the main reasons why D-Street did not like the fine print of the Rs 20 lakh crore stimulus package announced by the government?

A) Few of the announcements for MSMEs and NBFCs are widely accepted by the market. One of the concerns with the announcements is that the actions are missing which would revive the demand in the near term.

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Nevertheless, supply-side measures are also important, but considering the already declining economic growth before the lockdown, it is evident that the government would touch these areas so as to quickly revive the economy.

Since this was missing from the government’s action in the last two announcements (Wednesday and Thursday), the market has taken it negatively.

Q) Nifty recorded a negative return for the week ended May 15. What led to the fall?

A) As already discussed, the market is disappointed with the stimulus package. Lockdown extension and subdued management commentary about the near term also contributed to the nervousness in the equity market.

Besides this, there are global disturbances, especially the growing tension between the US and China, dented the global economic outlook in the near term.

Q) For this week as well – both mid & smallcap indices outperformed. Can we say that smart money has started chasing broader markets? 

A) It is too early to say that buying is happening in the mid & small caps indices. What might have happened to largecaps especially the index stocks is that massive ETF selling would have taken place, thereby leading to an out-performance by the mid & small caps indices.

Q) The index is consistently facing resistance around 9,400 levels – do you think we could retest March lows again?

A) As of now, we are do not see the Nifty retesting its March low as all the negativity has come to an end and even the Government has declared a massive rescues package of around Rs 20 lakh crore which might create a positive sentiment in a medium to long term.

Although the way Index is trading, it seems that it has formed a band for the time being and may continue further within the band, only either side breakout will decide the clear direction.

Technically, 9,000-9,500 is a range in which the Nifty index has been trading for the last few days. If the index gives a breakout from here, then 500-800 points movement can be there on either side direction.

Q) Any important events which investors should watch out for in the coming week? Also, what are the important levels on Nifty?

A) No such event is there next week, a major event has already taken place during the week.

For levels, if we talk then on a lower level, an investor should keep watch on 9,000, if the index gives the breakout of the same then we may see a further downside up to the level of 8,500-83,00.

There is a strong resistance around 9,500 on the upside, if the index manages to sustain above 9,500 then we may see a spurt up to the level of 10,000-10,300.

Q) Any 2-3 stocks breakout buys which investors could look at in the coming week?

A) Here is a list of top three stocks which could give 11-25 percent return in the short term:

HUL: Buy | LTP: Rs 2,032 | Target: Rs 2,300 | Stop Loss: Rs 1890 | Upside 14%

On a weekly chart, the stock has the strong support of its Horizontal Trend line which is placed at 1,900 from where a bounce-back can be expected in the counter.

Moreover, the stock has formed a Hammer Candlestick which is a Bullish Reversal formation and indicates a bullish move in the counter.

Based on the ongoing structure, we are expecting a very good move in the counter up to the level of 2,200-2,300 with the support of 1,890.

JSW Steel: Buy | LTP: Rs 174 | Target: Rs 218 | Stop Loss: Rs 152 | Upside 25%

On a monthly chart, the stock has the strong support of its Upward Rising Trend line which indicates a bounce back movement in the counter.

Moreover, on a daily chart, the stock has been trading above its 21 Days Moving Average which shows a positive trend for the time being.

Based on the ongoing structure, we are expecting a very good move in the counter upto the level of 200-218 with the support of 152.

UltraTech Cements: Buy | LTP: Rs 3579 | Target: Rs 3980 | Stop Loss: Rs 3260| Upside 11%

On a monthly chart, the stock has been trading in a Broadening Rising Wedge formation recently where the stock has taken the support of the lower band of the formation which suggests a bounce back movement in the counter.

Moreover, on a daily chart, the stock has been trading above its 21 Days Moving Average which shows a positive trend for the time being.

Based on the ongoing structure, we are expecting a very good move in the counter upto the level of 3,860-3,980 with the support of 3,260.

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.

Kshitij Anand is the Editor Markets at Moneycontrol.

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