Ajit Mishra
Markets spent the last week consolidating in a range and somehow managed to settle with modest gains amid mixed cues. While the global cues were muted, earnings announcements and pre-budget discussions remained in the focus.
Mostly sectoral indices, barring banking, exhibited strength and ended with decent gains. The buoyancy in the midcap and smallcap space further added to the positivity. Among the benchmark indices, Nifty made a new record high and finally closed at 12,352.35; up by 0.78 percent.
This week, the focus would remain on the earnings and news related to the upcoming Union Budget, in the absence of any major global event. On the earnings front, big names like ICICI Bank, Zee Entertainment, Asian Paints, Axis Bank, Larsen & Toubro, UltraTech Cement, HDFC AMC, ICICI Prudential and JSW Steel will announce their results along with several others.
We reiterate our view that only a decisive breakout above 12,400 would trigger a fresh surge in the Nifty else consolidation will continue. In case of any profit-taking, 12,200 and 12,000 would act as a support area. On the sectoral front, we suggest focusing more on pharma, which is set for a rebound after a prolong underperformance, and auto counters.
After the recent surge, we might see the broader indices taking a breather but there will be no shortage of opportunities on the stock-specific front so the focus should be more on stock selection.
Below are the top 3 stocks which can give good returns:
The Ramco Cement: Buy | Target: Rs 870 | Stop loss: Rs 795 | Return: 6.7%
Ramco Cement has formed a cup and handle pattern (which generally acts a continuous pattern) on the monthly chart while holding firmly above the support of major moving averages on multiple time frames. Currently, it is hovering in a range, after a sharp up move, offering fresh buying opportunity to those who missed the chance earlier. The chart pattern and confirmation indicators are also pointing towards a steady up move.
We thus advise accumulating in the zone of Rs 810-815. It closed at Rs 819.25 on January 20, 2020.
Dr Reddy's Laboratories: Buy | Target: Rs 3190 | Stop loss: Rs 2970 | Return: 4.6%
The stock has been gradually rebounding for the last one and a half year, after retesting the support zone around Rs 1900 levels. It has witnessed a fresh breakout from a consolidation range today and looks all set for the prevailing up move to continue. The recent buoyancy in the pharma pack is added positive.
We advise initiating fresh longs within the mentioned range of Rs 3035-3050. It closed at Rs 3059.60 on January 20, 2020.
Bank of Baroda | Sell January Futures | Target: Rs 90 | Stop loss: Rs 99 | Downside: 6.2%
Bank of Baroda has been trading in a downtrend and there’s still no sign of reversal. After struggling around the critical resistance hurdle of multiple moving averages i.e. (100, 50 EMA) on the daily chart, it has witnessed a sharp fall today i.e. on January 20 that also result in formation of a fresh shorting pivot.
We advise creating fresh shorts in the given range of Rs 96-97. It closed at Rs 94.75 on January 20, 2020.
(The author is VP Research at Religare Broking)
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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