Buy Asian Paints; sell DLF, Allahabad Bank: Mithil Pradhan

Mithil Pradhan, CMT Head - Technicals and Derivatives at Violet Arc Global Managers told CNBC-TV18, "The midcap pocket of the market has become very weak. So the first stock that I would like to sell is DLF. Realty has been weak for the last couple of months even when Nifty was making new highs. Today it has broken below descending triangle pattern, the support zone was around Rs 190 and it has traded below it for the last one and half hour which is what I believe. A descending triangle pattern is a very bearish pattern. So I am expecting Rs 175 levels on the downside which can actually come pretty soon."

"Looking at other stocks I also look at Unitech or HDIL which have broken supports. So overall even the BSE realty index is giving signals of short term downtrend. So I am pretty confident that this stock can actually slide lower," he said.

"On public sector undertaking (PSU) banks I am looking at selling Allahabad Bank. What happens is if a stock cannot breakout above the resistance on its third attempt then ideally a reverse move is usually seen. Now, Allahabad Bank made a third attempt to break above the Rs 125-126 zone yesterday but it failed miserably. So I am expecting that the entire pattern of triple top will break towards the downside now below the Rs 114 level and ideally it should attempt something like Rs 106-105 on the downside."

He further said, "FMCG index gave a breakout about couple of days back. This was again an ascending triangle pattern which gives a target of about 8,000 on the upside which is about 10 percent from here. HUL and ITC have already started moving up, so I am now looking at Asian Paints which is offering a great risk to rewards ratio. The stoploss can be kept around Rs 600 levels for Asian Paints and we can actually expect somewhere around Rs 635-638 kind of zone pretty soon. The momentum oscillators on all the FMCG stocks including Asian Paints which is looking extremely bullish and I would recommend everybody to put their money into defensives especially FMCG."