Jigar Patel picks Asian Granito India, Borosil Renewables for short term

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By Jigar S Patel, Senior Manager - Equity Research at Anand Rathi

July 2024 was a landmark month for Indian markets, highlighted by the Union Budget presented in the latter half of the month. Overall, the Nifty closed July with significant gains of 3.92 percent. Yet, a subsequent global selloff triggered a corrective move in the domestic markets in the last session (August 2).

In line with our expectations, the Nifty has already fallen over 400 points from its peak, and this downward trend may continue in the coming week.

Technically, we are observing signs of a market top. We anticipate the Nifty will test the 24,600 – 24,400 zone in the near term. A breach of this zone could lead to further profit-taking. On the upside, momentum would only be restored with a closing above the 25,000 mark, which could signal another potential high. Given the current conditions, traders are advised to remain cautious and avoid aggressive long positions.

The Nifty Bank index, as usual, underperformed the benchmarks. It initially climbed above the 52,500 mark but then corrected sharply to the 50,400 level, aligning with the extension of the rising trend line. A close below 50,400 would confirm a potential top in the banking index, possibly triggering renewed concerns in banking stocks. Upside momentum for the banking index would resume only above the 52,000 mark.

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Here are two buy calls for short term:

Asian Granito India | CMP: Rs 81.88

Asian Granito has recently confirmed a significant breakout from a long-standing falling trend line, surpassing the Rs 86 mark. This trendline breakout indicates a potential shift in the stock's price trajectory, signalling the end of a downtrend and the possible beginning of an upward move. In addition to this technical signal, the stock has formed a pattern resembling a bullish Head and Shoulders. This pattern is typically considered a reliable indicator of a reversal from a downtrend to an uptrend. The breakout and pattern formation is supported by increased trading volumes, suggesting strong buying interest, and the positive alignment of momentum oscillators, which reflect increasing bullish momentum.

Given these positive technical indicators, traders are advised to buy Asian Granito within the price range of Rs 88 to Rs 84. To manage risk, a stop-loss should be placed at Rs 76 on a closing basis. The anticipated price targets for this trade are Rs 101 and Rs 106, which are expected to be reached within the next 1 to 3 months.

Strategy: Buy

Target: Rs 101, Rs 106

Stop-Loss: Rs 76

Borosil Renewables | CMP: Rs 551.5

Borosil Renewables has been in a consolidation phase, consistently trading above its 200-day Exponential Moving Average (DEMA) around the Rs 480 mark for several months. This period of sideways movement indicated a phase of indecision or accumulation among market participants. Recently, however, the stock experienced a breakout from this range, signaling a potential shift in market sentiment and momentum. This breakout is further validated by a positive crossover of moving averages, suggesting increasing bullishness.

Additionally, a chart pattern resembling an inverse Head and Shoulders has formed, which is typically considered a bullish reversal pattern. This combination of technical indicators suggests a strong potential for upward movement. Consequently, traders are recommended to buy Borosil Renewables within the price range of Rs 544 to Rs 536, with a protective stop-loss set at Rs 480 on a closing basis. The anticipated targets for this trade are Rs 630 and Rs 660, expected to be reached over the next 1 to 3 months.

Strategy: Buy

Target: Rs 630, Rs 660

Stop-Loss: Rs 480

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.