Among sectors we prefer to initiate longs in Auto, Banking and Metal space for reasonable upside as the risk reward remains favourable.
The second quarter results have started and we believe markets have seen decent recovery from the lower range. We expect some consolidation at current levels over the next few weeks and should provide individual stock specific movement with respect to the results announcements.
Bank Nifty can gain positive momentum once it crosses the 200-day average placed at 28,800 levels. Nifty500 has made higher bottoms on monthly charts in range of 8,650-8800 levels which indicates the broader markets are in a sweet spot and any incremental positive news flow from the domestic or global markets would lead the momentum rolling in midcaps and smallcaps.
We believe the investors should look at the Nifty Next 50 stocks, as the index is trading down by 3.3 percent YTD compared to 5.5 percent YTD positive for Nifty50. Among sectors we prefer to initiate longs in auto, banking and metal space for reasonable upside as the risk reward remains favourable.
Below are the top 3 stocks which can give good returns:
IndusInd Bank: Buy | CMP: Rs 1,275 | Target: Rs 1,460 | Stop loss: Rs 1,190 | Upside: 14 percent
The stock has witnessed a strong base in range of Rs 1,190-1,200 levels over the past two weeks and witnessed sharp bounce from its 52-week lows. Major technical indicators on the daily scale has bottomed out, signaling near-term turnaround and ripe for a bounce back.
Long positions can be initiated for the target of Rs 1,460 with a stop loss of Rs 1,190.
Cummins India: Buy | CMP: Rs 575 | Target: Rs 650 | Stop loss: Rs 540 | Upside: 13 percent
The stock has made a double bottom near sub Rs 545 levels with positive momentum in the stock and overall sector. Bullish cross-over in RSI and Stochastic are signaling turnaround and resume its northward journey to test the 100-day average.
Long positions can be initiated for the target of Rs 650 with a stop loss of Rs 540.
Cadila Healthcare: Buy | CMP: Rs 235 | Target: Rs 265 | Stop loss: Rs 220 | Upside: 13 percent
The stock has completed his 76.4 percent correction of prior up-move (212-560) signaling near-term turnaround. Higher bottoms on weekly charts and crossover of its short term averages will save the stock falling from current levels.
Long positions can be initiated for the target of Rs 265 with a stop loss of Rs 220.
The author is Senior Research Analyst, Reliance Securities.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.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.