Jayant Manglik
The market resumed their declining trend last week and lost over one-and-a-half percent, pressurised by weak local cues and correction in the global markets.
This week started on an optimistic note amid mixed macroeconomic data, however, participation was limited mainly to the handful of index majors.
In the latter half of the last week, the market changed its tone completely and the benchmark indices plunged sharply after testing their crucial resistance zone.
Meanwhile, earnings announcements kept the participants busy as stocks witnessed volatile moves across sectors. Finally, Nifty settled at 10,303.55, down by 1.61 percent.
We expect volatility to remain high this week, too, thanks to the upcoming derivatives expiry and prevailing earnings season. Besides, movement on the currency front and indications from global markets will also be in focus.
On the earnings front, we have some of the big names viz. HDFC Bank, HCL Technologies, TVS Motors, Bajaj Auto, Maruti Suzuki India, Yes Bank, Dr. Reddy, ICICI Bank, ITC, Bharti Airtel, Biocon, and Kotak Mahindra Bank will be announcing their results during the week along with several others.
It’s getting difficult for the participants with every passing day. The recent turmoil in NBFC stocks has changed the sentiment and it will take time to subside.
Besides, issues pertaining to currency deterioration and correction in the world markets are adding to the worries. Considering the scenario, we advise maintaining “Sell on rise” approach and keeping leveraged positions hedged. Also, we suggest focusing more on stock selection.
On benchmark front, we expect Nifty to continue within a broader range of 10,100-10,700 in the near future and either side decisive breakout would trigger the next directional move.
Here is a list of top three stocks which could give 6-7% return in the short term:
Aurobindo Pharma: Buy| Target: Rs 820| Stop-Loss: Rs 730| Return 7.9%
Aurobindo Pharma has been consolidating in a range of Rs 720-800 levels for the last one month after retesting its previous high of around Rs 825.
The overall chart formation combined with signals from the confirmation indicators are clearly pointing towards a strong up move ahead. Traders shouldn’t miss this chance and accumulate in the range Rs 750-760. It closed at Rs 759 on October 22, 2018.
Canara Bank: Sell Nov Futures| Target: Rs 198| Stop-Loss: Rs 224 | Return 7.5%
PSU counters are either consolidating around their 52-week low or inching lower and Canara Bank is no different. It has witnessed a fresh breakdown on October 22, after hovering around its recent low and likely to see fresh fall ahead.
Traders should use any uptick to go short in the given range 214-216. It closed at 213 on October 22, 2018.
ONGC: Sell Nov Futures| Target: Rs 148| Stop-Loss: Rs 166 | Return 6.3%
ONGC witnessed the marginal recovery of late but failed to surpass the hurdle of multiple moving averages on the daily chart around 165 and formed a fresh short pivot. Indications are in the favor of negative trend to extend further.
Traders are advised to create fresh shorts within the range 158-160. It closed at 156.95 on October 22, 2018.
(The author is President, Religare Broking)
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