Podcast | Stock picks of the day: Revival possible in September; avoid shorting the Nifty

It was a volatile last week for Indian markets but the Nifty managed to close above the 11,000 mark, which is a crucial psychological junction.

Technically, : i) the recent correction got arrested around the 61.8 percent retracement level (10,637) of the previous upmove; ii) we could see formation of a ‘Bullish Piercing’ pattern on the daily chart on August 23; iii) The recovery on August 30 occurred from the key retracement ratios and formed a ‘Bullish Hammer’; and iv) The monthly candle concluded above 20-EMA, which remains a crucial support on a closing basis since March 2016 and depicts a bullish ‘Dragonfly Doji’ pattern.

We were hopeful since the last couple of days but looking at these multiple observations, it has certainly fuelled our conviction level.

The index seems to be struggling to surpass the sturdy wall around 11,150–11,200 levels. We will not be surprised to see it crossing these levels this week and the rally extending to 11,350-11,475 levels.

Hence, we advise traders to refrain from creating shorts and adopt a buy on decline strategy for a while. On the downside, 10,950 followed by 10,874 would now be seen as immediate support level for the Nifty.

Here is a list of top stocks which could return 6-8 percent in the next 3-4 weeks:

Siemens: Buy| LTP: Rs 1,202| Target: Rs 1,308| Stop Loss: Rs 1,154| Upside 8%

This has been a key mover in the capital goods space for the last many years. Importantly, the stock has been bucking the trend in the last 10-12 months and has been reluctant to succumb to the broader market destruction.

Yes, recently we saw some cooling off in this counter as it went through some consolidation phase as well. But, Friday’s close looks encouraging now as it has managed to give a convincingly close beyond the recent hurdles on a weekly basis.

The volume activity was also supportive of this price action and hence, we expect a resumption of a higher degree uptrend very soon.

We recommend buying this counter for a target of Rs.1,308 over the next few days. The stop loss should be fixed at Rs.1,154.

Escorts: Buy| Target: Rs 543| LTP: Rs. 510.20| Stop Loss: Rs 486| Upside 6%

After a long underperformance, finally, we can see some respite in the Auto and Auto ancillary space.This has been one of our preferred picks of late from this basket and certainly it has lived up to our expectations as we can see a colossal intra-week rally of over 12 percent from its crucial multi-year supports.

Still, nothing much changed and we expect the rally to continue. On Friday, we witnessed some breather but with a broader perspective, one should construe this as a good buying opportunity.

Going with all the above evidence we recommend buying this stock at current levels for a target of Rs.543 over the next few days. The stop loss can be placed at Rs 486.

(The author is Chief Analyst- Technical & Derivatives, Angel Broking)

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