Podcast | Stock picks of the day: 'Sell ICICI Prudential, Graphite India as 3-4% downside expected'

During the week under review, Nifty50 managed to sustain above its long-term moving average levels on a closing basis, but closed below 50-days EMA placed around 10,806-odd levels.

The index formed a weekly high of 10,987-level, but fell to form a weekly low of 10,756 levels on intraday basis. Despite making an initially rally during early session, it closed the week at lower level at 10,780.55, down by about 1.2 percent on a weekly basis.

A drag during the week was dominantly led by Nifty Media and Auto which was 17 percent and 6.6 percent, respectively. While Nifty Pharma and Energy were marginal gainers, up by 2.3 percent and 2.4 percent, respectively, during the same period.

The Nifty index formed a solid small-bearish candlestick pattern on weekly price chart indicating a rangebound trading level, coupled with bearish candlestick pattern on a daily scale.

A momentum indicator signaled a negative divergence with its weekly RSI 47 levels, while MACD continued to trade above its signal-line on the weekly scale.

With index slipping below 50-days moving average level on a closing basis, resistance is currently placed 10961 while support is seen at 10,650 levels.

The Indian equity market is expected to remain largely volatile on a rangebound level ahead of F&O expiry coupled with interim Budget, due on February 1.

Further, a margin contraction in Q3FY19 earnings by few large-cap is likely to dent sentiments going forward which is likely to pressure Nifty index to trade in a negative trajectory.

However, specific opportunities still remain intact on the backdrop of improved earnings, and thus we advise investors to remain selective on long-position.

Investors should keep a strict stop-loss of 10650 on the downside and 10931 levels on the upside will be key resistance level to watch.

Here is a list of top three stocks which could give 3-5% return in the next one month:

Wipro: Buy | Target: Rs. 371 | Stop-Loss: Rs. 330 | Upside: 5%

Wipro maintained an upward trajectory for the last one week despite a volatile market breadth and managed to swiftly move upward from its resistance zone of 50-days moving average placed at 330 odd levels on closing basis.

The stock also managed to break out from its 200-days moving average placed around 310 levels in the past session which forms a strong support base for scrip.

Initially, the scrip remained sideways and was consolidating in a price range of 340-307. The scrip formed a bullish candlestick pattern on both weekly and daily price chart.

The momentum indicator outlined a positive divergence in price with its RSI at 63 levels, coupled with MACD managing to make bullish crossover in same period to trade above its Signal-Line. We have a BUY recommendation for Wipro which is currently trading at Rs. 353.45

Graphite India: Sell | Target: Rs. 530 | Stop-Loss: Rs. 577 | Downside: 4%

Graphite India continued to trade in a negative trajectory for an extended period to fall below its crucial support of 670 odd levels in the previous session while it also breached its 200-days moving average on the downside placed at 818 levels.

The scrip continued to consolidate from a higher level of 1120-1050 odd levels towards a low of 770 levels, and made a strong rebound towards 1000 odd levels which failed in the later period.

The scrip made a 52-weeks low of 555 levels in the last trade which indicates sustain selling pressure. It formed a long bearish candlestick pattern on both daily and weekly price chart.

Further, weekly RSI stood at 29 odd levels indicating persistent selling regime, and MACD continued to trade above its Signal-Line. We have a SELL recommendation for Graphite India which is currently trading at Rs. 552.95

ICICI Prudential Life Insurance: Sell | Target: Rs. 290 | Stop-Loss: Rs. 310 | Downside: 3%

After remaining in a muted direction for the last 5-7 trading sessions, ICICI Pru Life Insurance came under massive selling pressure in the last four trading sessions to close below its crucial support of 200-days moving average placed at 350 odd levels, and also formed a 52-week low of 295 levels in last trade.

The scrip breached below all crucial moving average level in current trade despite making an attempt to reverse the trend which failed to keep scrip under selling regime.

The scrip formed a long bearish candlestick pattern on weekly price chart which indicates persistent selling pressure.

The momentum indicator continued to outline weak trend with weekly RSI at 37 levels while MACD started to trade below its Signal-Line in past sessions. We have a sell recommendation for ICICI Pru Life Insurance which is currently trading at Rs. 299.40

(The author is Founder & CEO, 5nance.com.)

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