Benchmark indices ended on a positive note for the second straight session on July 2 amid intra-day volatility. It managed to pull back smartly from the lows in the afternoon and ended the session 0.4 percent higher at 11,908 levels.
Amongst the broader market indices, BSE Midcap gained in line with the benchmark while BSE Smallcap closed on a flat note.
Barring Realty, Healthcare and Banks which witnessed selling pressure, all the other sectoral indices ended in the green with Oil & Gas, Power IT and Metals, being the top gainers, were up 0.5-1.1 percent respectively.
In the near-term, volatility is likely to remain high. Hence, we maintain our cautious stance on the markets at higher levels.
The upcoming Union Budget (scheduled on July 5) is likely to provide further direction to the markets in the coming sessions.
Globally, while the temporary trade truce between the US and China is a positive development, the recently-escalated tensions between the US and Iran could continue to induce high volatility across indices.
Participants should prepare themselves for a volatile week, citing a list of events and data which are lined up. The focus should more be on risk management aspects as we may have erratic swings in the index as well as stocks as the events unfold.
The Nifty50 may continue to hover in a broader range of 11,500-12,000. We advise preferring hedged positions and keeping a check on the position size.
Here is a list of top three stocks which could give 4-10 percent return in the next 3-4 weeks:
DLF: Buy| LTP: Rs 192.30| Target: Rs 205| Stop-Loss: Rs 182| Upside 7 percent
DLF has recovered swiftly of late and looks upbeat to extend this rebound ahead. The chart pattern and the positioning of the oscillators are also in sync for a fresh up move. We advise initiating fresh longs within Rs 188-190.
Engineers India: Buy| LTP: Rs 120.55| Target: Rs 132| Stop-Loss: Rs 116| Upside 10 percent
After a decent correction from the record high, EIL has been consolidating in a zone for roughly a year on the weekly chart. It has now reached closer to the upper band of the range and is likely to witness a breakout from the same in the near future. Traders can accumulate within the given range Rs 119-122.
Maruti Suzuki India: Sell July Futures| LTP: Rs 6,559| Target: Rs 6,300| Stop-loss: 6,670| Downside 4 percent
Most of the auto stocks in the packs are reeling under pressure and Maruti is no different. After the breakdown from its consolidation range, it has witnessed a marginal bounce which offers a fresh shorting opportunity for those who missed the chance earlier.
We, thus, advise traders to use this bounce and initiate fresh shorts as per the mentioned range of Rs 6,545-6,565.
(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.