By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
The Indian markets experienced a highly eventful week (ended July 26), largely influenced by the Union Budget 2024. The Nifty corrected towards the 24,000 mark as the budget sparked some disappointment among investors, and by Thursday, the FII’s long-to-short ratio had decreased to 57 percent. By Friday, market sentiment had reversed dramatically, with bullish investors driving the index to a new all-time high of 24,861, which resulted into a gain of over 1 percent compared to the previous week's close.
Looking ahead, if the Nifty moves above 24,860, it could potentially reach the significant milestone of 25,000 and possibly higher. At that juncture, we would need to reassess the market conditions and develop a new trading strategy, particularly considering the risk of negative divergence in the daily Relative Strength Index (RSI). On the downside, the 24,400 level is expected to provide strong support for the coming week; any breach of this level could weaken the current momentum.
The Nifty Bank index continued to underperform relative to the broader market benchmarks. The Union Budget 2024 did not provide substantial support for the banking sector, leading to its underperformance. According to our analysis, the index approached the 50,000 mark by Thursday’s session but found support at the trendline breakout extension, which prompted a sharp rebound during Friday’s session. Moving forward, a breach of the 50,000 level could indicate further pessimism for the index. Otherwise, we expect a continued recovery for the Bank Nifty, with potential upward movement towards the 52,000-52,500 range in the coming sessions.
Here are three stocks to pick for short term:
IDFC First Bank | CMP: Rs 74.5
After reaching a peak near Rs 101 in September 2023, IDFC First Bank experienced a substantial correction of Rs 30, translating to a 29.34 percent decline from its high. Recently, the stock found support near the 0.618 retracement level of its previous upmove from 53 to 101. Additionally, a bullish BAT pattern has formed precisely at this 0.618 retracement level, making the current levels attractive for buying. Based on these technical indicators, buying in the Rs 72-75 zone is recommended. The target price is set at Rs 84, with a stop-loss placed near Rs 68.5 on a daily close basis.
Strategy: Buy
Target: Rs 84
Stop-Loss: Rs 68.5
Cipla | CMP: Rs 1,575
Apart from the previous trading session, Cipla has been trading within a narrow price range of Rs 1,485-Rs 1,535. This indicates a period of consolidation, where the stock's price has been relatively stable and moving sideways. However, during the previous trading session, Cipla decisively broke above this range with massive volume, suggesting further bullish momentum. On the indicator front, the RSI has reversed from the 50 level, which further affirms our bullish bias. Therefore, we recommend buying Cipla during pullbacks near Rs 1,525-1,540 range, targeting an upside of Rs 1,635. To manage risk, a stop-loss should be set near Rs 1,495 on a daily close basis.
Adani Ports and Special Economic Zone | CMP: Rs 1,543
Excluding the previous trading session, Adani Ports has been trading within a price range of Rs 1,480-Rs 1,520, indicating a period of consolidation where the stock's price has remained relatively stable and moved sideways. However, during the last trading session, Adani Ports decisively broke above this range and closed higher, suggesting further bullish momentum. On the indicator front, the RSI has reversed from the 50 level, which further supports our bullish outlook. Therefore, we recommend buying Adani Ports during pullbacks near Rs 1,530-1,540 range, with a target of Rs 1,650. To manage risk, a stop-loss should be set near Rs 1,480 on a daily close basis.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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