Remain long on Nifty till 10,700 sustains; 3 buys that may return up to 17%

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26 Aug, 2025 12:21

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Vikas Jain

The Nifty traded in a narrow 138 points range, but export driven sectors like pharmaceuticals and IT remained strong, gaining 8.3 percent and 2.6 percent, respectively, for the week. Sun Pharmaceutical Industries led the strong upmove in the pharma sector after its Halol plant received clearance from US Food and Drug Administration. All stocks gained 8-15 percent week-on-week within the pharma index.

Tata Consultancy Services announced a buyback of up to Rs 16,000 crore at a 14 percent premium to its Friday’s closing price. This helped the upmove in the IT space, with TCS and Infosys hitting new all-time highs.

The Cabinet cleared one of the largest foreign direct investments in HDFC Bank. The Rs 24,000 crore fund infusion will not result in it breaching the foreign equity holding cap of 74 percent.

Consumer inflation rose to a four month high of 4.9 percent, in line with market estimates.

For the week, the Nifty gained 0.5 percent, while midcaps and smallcaps declined 0.2 percent and 0.5 percent, respectively. Among sectors, it was a mixed bag with pharma and IT up 8.3 percent and 2.6 percent, while metals and realty declined 3.2 percent and 1.5 percent, respectively.

Other sectors like automobiles, banks and fast moving consumer goods remained flat to negative. India VIX declined 5.7 percent to close below 12 levels.

Market outlook
The Nifty should hold on to supports near 10,750 levels. We continue to remain positive till the Nifty sustains above 10,700 levels. A slip below this level would see the monthly candle turning negative, putting pressure on the downside.

A crossover of 10,850 levels would trigger a swift move above 11,000 levels. Nifty 10,700 PE has seen consistent additions in the past few days, with open interest of 53 lakh shares. On the higher side, 11000 CE has seen the highest open interest of 44 lakh shares.

Here is a list of 3 stocks that can return 9-17 percent return in the short term:

Motherson Sumi System | Rating: Buy | Target: Rs 350-360 | Stoploss: Rs 294 | Return: 17%

The stock reversed after taking support of prior multiple lows (placed in the range of 300-295) and later consolidated in the narrow range.

Bullish divergence in RSI and positive cross-over in Stochastic are signalling that the stock is on the verge of turnaround.

As per the current set-up, we believe that the stock will recover prior losses utilising recent consolidation.

Thus long position can be initiated here for the target of Rs 350-360 with a stop loss of Rs 294.

Biocon | Rating: Buy | Target: Rs 690-710 | Stoploss: Rs 594 | Return: 13%

The stock has found strong support around its 100-day moving averages after witnessing sharp decline from its life-time-high (Rs 696), signaling near-term turnaround.

Positive cross-over in RSI from its bull market support zone (40-33) and rise in Stochastic are also positive for the stock.

We believe that the stock will soon resume its northward journey and will record the new high.

Thus long position can be initiated here for the target of Rs 690-710 with a stop loss of Rs 594.

UPL | Rating: Buy | Target: Rs 765 | Stoploss: Rs 670 | Return: 9%

The stock reversed after taking support of prior multiple lows and formed a bullish reversal pattern-Hammer-on the weekly chart.

Bullish divergence in the key technical indicators around their oversold zone w.r.t. recent fall is signaling that the stock is on the verge of reversal.

Though medium-term trend is negative for the stock, a corrective bounce back cannot be ruled out in the near-term.

Thus long position can be initiated here for the target of Rs 765 with a stop loss of Rs 670.

Disclaimer: The author is Senior Research Analyst, Reliance Securities. 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.