Finance

Nifty’s close below 16800 to be negative for D-St; Buy SBI, ITC, others to pocket gains, charts show strength


By Shrikant Chouhan

Benchmark indices BSE Sensex and Nifty 50 recorded volatile price action on Monday. Even though Nifty 50 / BSE Sensex opened below the psychological level of 17000/56500, they closed at 17069/56975, which is positive for the short term trend of the market. Fresh buying was seen in HDFC Bank and Housing Development Finance Corporation (HDFC), while profit-booking was seen in auto and technology stocks. Technically, the market is holding above the level of 16800, but at the same time, it is failing to show sustained momentum. In short, the market is consolidating within a broad trading range of 17400-16800. 

We may not see any trending move in the market unless the market is crossing the 17400 level or breaking the 16800 level. It is advisable to be a stock-specific trader in the market rather than focusing on the index. A close below the 16800 level will be negative for the market. The volatility index is well above the 20 level, which is an indication that the market is about to break the trading range in the near future. 

Technical stocks to buy

ITC
BUY, CMP: Rs  263.15, TARGET: Rs 280, SL: Rs 255

After remarkable rally in the past few weeks the stock went into a range bound mode. At present, the stock is seen coming out of the consolidation phase with a range breakout. And hence the formation indicates a further uptrend from the current levels.

Muthoot Finance
BUY, CMP: Rs 1,273.65, TARGET: Rs 1,340, SL: Rs 1,245

The counter had been in a declining trend in the past many months. However, at present there is a pause in its downward movement due to its strong multiple support levels. As the stock is available near to its demand zone which could act as a strong base, simultaneously making it a favorable candidate in terms of risk and reward.

Ultratech Cement
BUY, CMP: Rs 6,679, TARGET: Rs 7,020, SL: Rs 6,540

On the monthly scale, the stock has presented a robust rally, after a breather of few trading sessions, it has taken a pause in the momentum within a range. Currently, the counter is trading near the lower boundary of the range which indicates reversal from current levels. 

State Bank of India (SBI)
BUY, CMP: Rs 491, TARGET: Rs 515, SL: Rs 480

The stock witnessed gradual price decline from the higher levels, however, its down move took a pause with a hammer candlestick pattern. The counter has formed a reversal formation with decent volume activity and retreated from the lower levels for a fresh leg of uptrend in coming trading sessions.

(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, Views expressed are the author’s own.)


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