We still advise traders not to have a contrarian approach on the market and should rather capitalize on such declines.
Last week was more of consolidation week for our markets after the recent run from lower levels. We started trading for the week on a positive note and then continued our march higher towards the next psychological junction of 11,500. Since the overall optimism was so high, the Nifty50 did manage to test and even surpass this level during the week.
But, during the latter half of the week, index saw subdued moves with some hint of profit booking on March 22 to conclude tad below 11,500 by adding negligible gains to the previous week’s close.
This week’s lethargic move was no surprise to us as we had clearly opined about a possible consolidation after Nifty entering the crucial trading range of 11,500-11,600.
In fact, we saw some tiredness on the last day of the week. Nifty breached previous day’s low for the first time in last nine days whereas Bank Nifty did similar on the 13th day.
More than weakness, we would rather construe this as pullback or profit booking move, which was very much overdue after giving such a steep rally in a short span.
As far as levels are concerned, 11,520 followed by 11,600 remains to be immediate hurdles and on the flipside, support is visible in the vicinity of 11,420–11,383 for the forthcoming week.
In our sense, this breather was necessary before Nifty moving towards its record highs. Thus, we still advise traders not to have a contrarian approach on the market and should rather capitalise on such declines.
Having said that, one needs to be very fussy now when it comes to the stock selection because not all stocks are likely to perform well in such kind of consolidation.
Here is a list of top two stocks that could give 9-11 percent returns in next 1 month:
Jubilant FoodWorks: Buy| LTP: Rs 1,430.40| Target: Rs 1,565| Stop loss: Rs 1,384| Upside: 9.4 percent
This stock has been consolidating in a range since the last few months. In the initial part of the week, the stock prices finally broke out from this congestion zone along with reasonably higher volumes.
Further, if we look at it from a broader perspective, it appears that the stock has completed its correction of the larger degree uptrend.
The ‘RSI-Smoothened’ on the daily chart has entered a ‘Bull Territory’ after crossing the 70 mark. Considering these evidence, we recommend buying at current levels for a target of Rs 1,565 and the stop loss should be fixed at Rs 1,384.
Sundram Fasteners: Buy| LTP: Rs 550.15| Target: Rs 615| Stop loss: Rs 508| Upside: 11.8 percent
In the last couple of weeks, the mid and small-cap baskets are on a roll. In fact, unlike previous months, so many stocks from the ‘cash’ segments started raising their heads higher and have given some stellar moves.
It appears that they are finally out of slumber and are gearing up for strong moves. This stock is clearly one of them.
After a long consolidation of nearly five months, the stock has confirmed a breakout from multiple technical indicators. Looking at the increase in volume activity, we expect the stock to climb in the next few weeks.
Thus, we recommend buying at current levels for a target of Rs 615 and the stop loss should be fixed at Rs 508.
The author is Chief Analyst- Technical & Derivatives, Angel Broking.Disclaimer: 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.