The markets continued its decline for the third successive week and lost over 3 percent. Weak domestic cues and not so supportive global markets pushed the bulls completely on the back foot.
The sentiment was down from the beginning as participants took note of widening current account deficit (CAD) and declining foreign exchange reserves, due to the weakening of currency against the US dollar.
The situation worsened as the week progressed and sharp fall on the final day of the week unsettled the participants completely. Finally, Nifty settled at 11,143.1, closer to its important support.
This week is going to be crucial for markets as we have derivatives expiry scheduled on Thursday.
The fear of liquidity crunch triggered panic selling recently despite clarification from the NBFC majors and statement from the RBI and SEBI. We feel it will gradually subside with time but traders should be extra cautious at present.
We advise limiting leveraged positions and keeping the existing trades hedged. Also, strictly avoid adding to the loss-making trading positions.
Investors, on the other hand, may start accumulating fundamentally sound counters on dips with medium to long-term view.
Here is a list of top three stocks which could give 5-7 percent return in next 1 month:
ACC: Sell October Futures| Target: Rs 1,450| Stop loss: Rs 1,585| Return 5.5 percent
In line with other cement counters, ACC has been trading in a broader trading range for the last three years. It has formed a distribution pattern on the daily chart and is now trading on the verge of a breakdown from the same.
We advise traders not to miss this opportunity and initiate fresh shorts within the range Rs 1,535-1,545. It closed at Rs 1,522 on Monday.
Bharti Airtel: Sell October Futures| Target: Rs 340| Stop loss: Rs 372| Return: 6 percent
Most telecom counters are trading in a downtrend and Bharti Airtel is no different. After hovering in a narrow range near its resistance hurdle of moving averages around Rs 390, it has witnessed a fresh breakdown on Monday, and likely to see further fall in near future.
Traders should use any technical bounce to go short in the given range Rs 362-365. It closed at Rs 357.2 on Monday.
Exide Industries: Buy| Target: Rs 285 | Stop loss: Rs 255 | Return: 7.1 percent
After making a record high at Rs 304.70, Exide Industries has been witnessing profit taking for the past almost one month. It is currently consolidating around the support zone of multiple moving averages on different time frames and likely to see swift rebound in near future.
Traders shouldn’t miss this chance and accumulate fresh longs in the range Rs 264-266. It closed at Rs 265.8 on Monday.Disclaimer: The author is President, Religare Broking. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.