It would be advisable to avoid bottom fishing at the current juncture.
The Nifty50 has broken below August lows of 10,780 which could further lead to fresh selling pressure. After this, we expect the Nifty to head lower towards 10,550 zone.
We are seeing a resumption of the downtrend in various sectors. The realty index, PSU Bank, Private bank and FMCG index have broken down indicating weakness.
Bank Nifty, too, has broken below its August lows which indicates the index has the potential to move lower towards 26,500 level which is the March 2019 low. It would be advisable to avoid bottom fishing at the current juncture.
The Nifty Bank closed 2.4 percent lower at 27,034 on August 22, weighed down by losses in YES Bank, RBL Bank, Bank of Baroda, PNB, and State Bank of India.
Here is a list of top two stocks which could give 4-8 percent return in the next three-four weeks:
Ashok Leyland Aug Futs: Sell| LTP: Rs 57.70| Target: Rs 53| Stop Loss: Rs 59| Downside 8 percent
The stock has been trading in a narrow band for the past two weeks and has finally broken down from a consolidation base on the daily chart.
We witnessed negative crossovers on the RSI which further accentuates our short-term bearish stance on the stock. Traders can hold short positions in the stock with the mentioned stop loss on closing basis.
Bank of India Aug Futs: Sell| LTP: Rs 62.10| Target: Rs 59.4| Stop Loss: Rs 63.9| Downside 4 percent
The stock has been trading in a narrow band for the past two weeks and has finally broken down from the consolidation base on the daily chart.
It has also resumed its lower top lower bottom structure. Traders can hold on to its short positions with the mentioned stop loss on closing basis.
The author is Senior Technical Analyst, IIFL.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.