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Last Updated : Feb 22, 2019 08:09 AM IST | Source: Moneycontrol.com

Podcast | Stocks picks of the day: V-shaped recovery likely for metal stocks

The Nifty Metal index has zoomed this week and has shown signs of early recovery. The index has broken out from a falling channel pattern on the daily chart.

Moneycontrol Contributor @moneycontrolcom
 
 
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Hadrien Mendonca

The market extended gains for the second consecutive session on February 21 after snapping an eight-day losing streak amid short covering in the benchmark indices.

Nifty seems to have formed a Double Bottom on the daily chart as the index respected its immediate previous low of 10,597 hit on January 29, 2019.

This indicates a short-term recovery is on the cards. The 10,780-10,800 zone is a confluence of resistance area for the Nifty as multiple moving averages dwells around those levels.

A break above the resistance would lift Nifty higher towards the 10,980-11,000 zone once again. The metals, infrastructure, PSU banks and broader markets i.e. mid and smallcap could see more traction in the coming week.

The Nifty Metal index has zoomed this week and has shown signs of early recovery. The index has broken out from a falling channel pattern on the daily chart.

The decline has been too steep to sustain and a V-Shaped recovery in the metals space cannot be ruled out in the near term.

Following is a list of stocks that could deliver up to 6-9% returns in the short term:

Jindal Steel: Buy| Target: Rs 166| Stop Loss: Rs 149.5| Upside 7%

The stock has shown immense strength in the past two weeks and has bounced back from the lower end of the falling channel pattern.

The stock has the potential to extend the current momentum which is likely to lift the stock towards the expected target of Rs 166 in the medium term. The relative strength is above the 60 levels which further accentuates out bullish stance on the stock.

Muthoot Finance: Buy| Target: Rs 580| Stop Loss: Rs 513| Upside 8.5%

The stock has been consolidating for the past five weeks and has finally broken out from a Symmetrical Triangle pattern on the daily chart. The price outburst has been accompanied by a smart uptick in traded volumes.

Positive crossovers on the smaller period moving averages indicate that the current momentum is likely to get extended further. Hold long positions with a strict stop around Rs 513 on a closing basis.

Bajaj Finance: Buy| Target: Rs 2800| Stop Loss: Rs 2582.5| Upside 5.5%

The stock has been trading in a channel since January 2019 and has currently recovered sharply from the lower end of the channel.

Given the positive crossovers on the RSI, we expect the stock to make an attempt to move towards the Rs2,800 levels which are the higher end of the entire channel. Hold long positions with stop-loss at Rs 2,582.5 on a closing basis.

Disclaimer: The author is a Senior Technical Analyst, IIFL. 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.
First Published on Feb 22, 2019 08:09 am
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