Podcast | Stock picks of the day: Market may trade sideways between 11,400 and 11,700 levels, buy on dips

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The market took a giant leap after Finance Minister Nirmala Sitharaman’s slashed corporate taxes. All of a sudden, the tide turned upwards and before anyone could realise, the Nifty was well above 11,200 levels. Since it was predominantly a short squeezing move, the market was not done with such a sharp one day spurt. We had a good bump up on September 23 to kick-start the week on a strong note.

Participants were so ecstatic; the Nifty went on to almost kiss the 11,700 mark in the initial euphoric move. However, this seemed to be an overreaction and hence, throughout the remaining part of the week, market consolidated in a slender range to eventually conclude a tad above 11,500 levels.

The Nifty soared 1,000 points in merely two days and one has to understand, seldom do we see such a colossal move in quick succession. To bring market sentiment back to equilibrium, we either had to see natural profit booking or had to spend some time in a range.

The market seemed to have opted for the second choice and hence, we consolidated after the bump up on September 23. Now, the low hanging fruit or the easy money is already gone at least for traders.

We are likely to witness such choppy moves now and hence, one needs to be very selective while picking up a stock. The directional bias remains positive as long as we are above the 11,200 mark. Meanwhile, any dip should be construed as a buying opportunity.

The immediate range can now be seen at 11,400-11,700 levels and it’s advisable to stay light in this band. We expect the index to emerge out of it very soon and in the upward direction. In this scenario, the next levels to watch out would be around 11,900-12,000.

Traders are advised to keep a tab of all the above mentioned levels and should focus on individual stocks that are likely to provide better trading opportunities. The actual momentum will now trigger only above 11,650-11,700 levels, which will attract a lot of participants who are still waiting on the sidelines.

Here are two stocks that can offer strong returns: Sudarshan Chemicals: Buy | LTP: Rs 375.60 | Stop loss: Rs 345 | Target: Rs 430 | Upside: 14%

On the weekly chart, the stock prices after oscillating within a range of Rs 300 – 360 for the last few months have broken the range on the upside, confirming a bullish breakout. The said breakout is witnessed with a good increase in volume. In addition, prices have closed above all the major moving averages i.e. 50DMA, 100DMA and 200DMA which indicate overall bullishness in the counter.

For the last few weeks, midcap stocks are providing impressive moves and the above technical setup suggests that this stock is gearing up for a strong move in the near term.

We recommend buying this counter for target of Rs 430 over the next few days. The stop loss should be fixed at Rs 345.

SBI Life Insurance: Buy | LTP: Rs 842.50 | Stop loss : Rs 794 | Target: Rs 927 | Upside: 11%

This stock is in a strong uptrend continuously moving in a ‘Higher Top Higher Bottom’ price formation. On the daily chart after making an all-time high at Rs 862 levels the stock prices witnessed a time wise correction as the oscillators were in deep overbought territory. The said correction is healthy for an overall uptrend and the prices seem to have now resumed the uptrend by breaking above the recent consolidation.

In addition, RSI the momentum oscillator after the initial dip from the overbought zone has again started moving northward suggesting fresh leg of up move in the near term. Going with all the above evidences we recommend buying this stock at current levels for a target of Rs 927 over the next few days. The stop loss can be placed at Rs 794.

The author is Chief Analyst- Technical & Derivatives at Angel Broking.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management.
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