The Nifty/Sensex is diverging negatively on a daily chart and that would trigger further weakness. In the short term, the market is heading for 13,700 on the Nifty, and 46,500 levels on Sensex if it doesn’t stop at 13,900/47,300 levels.
On the higher side, 14,200/48,200 and 14,350/48,500 would be crucial resistance levels that should be utilised to reduce weak long positions.
As the market is falling vertically, we are of the view that ahead of the Union Budget, we should look for adding strong and selective stocks to our positional portfolio between 14,000 and 13,700 (47,500) levels.
The level of 13,700 is significant in terms of Fibonacci retracement support and a level of 50-Days SMA. A relief rally is more likely in the near term, however, the broader trend of the market would turn strong/positive if it crosses 14,750 levels again.
Here is a list of stocks that could be good Budget picks:
SBI Life: Buy
The stock has witnessed a sharp price surge in the recent past but post 921 breakout, the stock failed to sustain at higher levels and due to consistent selling pressure again it was corrected by over 10 percent.
From the last couple of weeks, the stock has been volatile and the texture of the chart suggests it will remain volatile for the next few trading sessions.
However, the medium-term structure of the stock is still in to positive and likely to continue in the near term. In addition, on weekly charts stock still, maintain higher bottom series which is broadly positive for the SBI Life.
Currently, the stock is trading near 50-Day SMA and the daily and weekly structure of the stock clearly suggests a strong possibility of a fresh uptrend rally from current levels.
We are of the view that buy 1st trance (50 percent) at current levels (875), and the second trance (remaining 50 Percent at 825) with the 1250 price target, 760 should be the final support stop loss level for the positional traders. (Insurance)
Bharti Airtel: Buy
The stock is in a long-term breakout. It has broken multi-year resistance at 500. Although the stock was down in the second half of the year it recovered back and regained the level of 500 plus.
We are of the view that the stock is heading for Rs 700 in the medium term. It is a buy at current and more on dips with a final stop loss at 530. (Telecom and digitization play).
Ambuja Cement: Buy
The stock is forming higher top higher bottom series on a weekly and monthly basis. It has recently broken consolidation triangle formation at 225 and recovered back sharply.
Technically, the stock is ready to surpass the level of 291.50, which is an all-time highest level for the stock. Buy in tranches with a stop loss at 225. On the higher side, we could see the levels of 290 and 300. (It is a building materials play).
The stock is diverging positively on long-term charts (Monthly time frame). Based on it could move to the levels of 75 on the minimum and 100 on the maximum side. The metal index has formed a higher bottom in the year March 2020.
We are of the view that the index is ready to surpass the all-time highest levels in the coming few months and that would positive for the entire sector. Investors can buy at current levels and more on dips with a final stop loss at 50. (A play on the allotment of Coal Mines And Railways Related Work)
It is following the pattern of a Higher High and Higher Low on a monthly basis. It is suggesting us that the “buying is emerging at every major decline”.
Since, October 2020, the stock entered in consolidation mode. It is forming a symmetrical triangle on a daily basis, which is primarily an indication of bullish continuation.
The strategy should be to buy at current levels and more on dips up to 1200 with a final stop loss at 1150. On the higher side, 1350 and 1500 seem achievable. (Auto/Agriculture play)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.