Currently, post the tax reforms and renewed buying interest from FII and DII have lifted the sentiments heavily and this should help the index in closing the bearish gap.
The Nifty has broken above the falling trend line, which is formed connecting its highs of 12,103, 11,981 and 11,695.
Breakout of this nature is grossly positive for the market and should take it higher to levels of 11,800, 12,000. Seeing the recent run-up, the probability of a new high is also huge.
Our strategy should be very clear, which is to buy on dips. Supports or levels where Nifty should be bought are 11,400 and 11,200.
On the upside, Nifty has left a bearish gap on the day of Union Budget at 11,770 when the sentiments relating to the economy were negative. Currently, post the tax reforms and renewed buying interest from FII and DII have lifted the sentiments heavily and this should help the index in closing the bearish gap.
The auto sector has recovered sharply and any dips should be utilised to enter into heavyweight auto stocks. Nifty FMCG space has been a consistent outperformer and one should be a buyer in this space, Marico is our top-pick here.
Global uncertainty around the Brexit deal and the USA-China trade war are worrisome factors for the market. At the domestic level, we expect earnings to revive in the second half of the current financial year when GST and tax reforms would start to kick in at an accelerated pace.
Page Industries | Rating: Buy | LTP: Rs 21,498.45 | Stop loss: Rs 20,550 | Target: Rs 23,000 | Upside: 7 percent
The stock has had a significant run of Rs 8,000 from the levels of Rs 17,150 to the recent high it made of Rs 25,088. Currently, the stock has retraced 50 percent of its move, which provides crucial support for the stock and some buying has emerged around these levels.
Weekly reversal formation is also seen, hence, a decent upside can be expected from current levels.
Marico: Rating: Buy | LTP: Rs 391.85 | Stop loss: Rs 379 | Target: Rs 420 | Upside: 7 percent
The FMCG pack has been the least impacted from the recent volatility and a major gainer of the recent tax reform announcement. Marico has remained a significant outperformer and witnessing some consolidation at upper levels, likely forming a flag pattern, which is a bullish continuation pattern.
HDFC Bank | Rating: Buy | LTP: Rs 1,229 | Stop loss: Rs 1,179 | Target: Rs 1,330 | Upside: 8 percent
The stock has been a consistent outperformer, even though being a large-cap. Also, it is forming a higher-high-higher low formation on daily charts, whereas the index is trading below the level of 11,700, which is grossly positive.
Currently, the stock has retraced to an important support zone of Rs 1,180-1,190, post the significant rally from Rs 1,084 to Rs 1,280. Such zones offer an excellent buying opportunity for traders, as well as investors.
The author is SVP Technical Research at Kotak Securities.Disclaimer: The views and investment tips expressed by investment experts 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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.