Jayant Manglik
The market extended its consolidation phase and lost over a percent last week. Though the beginning was upbeat, thanks to firm global cues and encouraging earning announcements but it couldn’t sustain for long and drifted gradually lower in the following sessions.
Sharp decline on the broader front unsettled the participants and further added to the negativity. Finally, the Nifty closed 119 points lower at 10,661 on January 29.
In the coming week, participants will also be eyeing Interim Budget on Friday, February 1. The market is still struggling to find direction and the recent fall in broader indices has raised questions over the possibility of a breakout.
The Nifty has crucial support at 10,700 and a decisive breakdown could trigger fresh fall. On the downside, 10,600-10,500 zone would act as support.
Considering the upcoming events and data, we suggest keeping limited exposure and waiting for further clarity. IT and FMCG packs look comparatively stronger and should be preferred for long trades whereas negativity may continue in auto, metal and PSU banking counters.
Here is a list of top three stocks that could return up to 6 percent in next 1 month:
Tata Consultancy Services: Buy| Target: Rs 2,070| Stop loss: Rs 1,890| Return: 6.1 percent
Among the sectoral indices, IT pack is showing tremendous resilience and maintaining its positive bias. TCS has swiftly rebounded of late after testing the support zone of long-term moving average (200-EMA) on the daily chart.
It has witnessed a fresh surge on January 28, after spending nearly a week around Rs 1,900. The chart pattern and positioning of confirmation indicators are pointing towards further surge in near future. We advise initiating fresh longs within Rs 1,930-1,950. It closed at Rs 1,955 on January 28.
Hindustan Petroleum Corporation| Sell Feb futures| Target: Rs 222 | Stop loss: Rs 243 | Return: 5.9 percent
Indications are mixed from the oil marking companies (OMC) pack and HPCL is signaling a fresh fall. It has been struggling around the resistance zone of 100-EMA on the weekly chart and formed a fresh shorting pivot. We advise creating fresh shorts in the mentioned range of Rs 236-239. It closed at Rs 234.75 on January 28, 2019.
Tata Chemicals: Sell Feb Futures| Target: Rs 625| Stop loss: Rs 685| Return: 6.1 percent
Tata Chemicals has been swinging in a broader consolidation range of Rs 660-790 for last one year and is now trading on the verge of a breakdown from the same. Traders shouldn’t miss this chance and create a fresh short position in the given range of Rs 666-672. It closed at Rs 663.10 on January 28, 2019.
The author is President, Religare Broking Ltd.
Disclaimer: 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.
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