Stocks To Buy: Day Trading Guide By Sumeet Bagadia On Tuesday, 6th August

On Monday, domestic benchmark indices started the day down due to negative global cues. Nifty began the day with a deficit and suffered sell-off pressure all day long. Nevertheless, it closed over the psychological threshold of 24,000 and ended the day at 24,056, down from the previous day's closing of 24,056. With the Nifty Midcap 100 and Smallcap 100 indices dropping by around 3.55% and 4.57%, respectively, the broader market lagged the benchmarks. The Bank Nifty index had a bad start to the day, continued to be under pressure, and ended the day at 50,092. The selling was stoked by mounting worries that the US economy is weakening and that the Federal Reserve is lagging behind in terms of policy aid. This led to a collapse of the global stock markets. On Monday, August 5, 2024, two major Indian stock market indices, the Sensex and the Nifty 50, both saw a decline of over 3% due to an extensive sell-off.

Market Outlook

Vinit Sambre, Head - Equities at DSP Mutual Fund said, "The market witnessed drawdown today, driven by sharp cuts in markets such as Nikkei, Taiwan and Korea. The data on US employment is not encouraging either. These developments are causing panic, particularly as Indian markets, which trade at high valuations, could also see some sell-offs. However, when examining the fundamentals, corporate earnings, while having moderated from the rapid pace of the past two years, remain modest. Growth is being supported by government capital expenditure and a likely revival in consumption, bolstered by good monsoons and an improving rural outlook."

"Additionally, corporate balance sheets are not heavily leveraged, making them less susceptible to external risks. Banks' balance sheets are also in good shape, with low levels of non-performing assets (NPAs). Historically, periods of volatility have provided opportunities for investors to realign their asset allocation. If the valuations become more reasonable, this current period of market turbulence can be used strategically to consider raising exposure to equities gradually with 5-7 years view. Despite the current uncertainties, the long-term outlook remains constructive due to strong fundamentals, government initiatives, and a stable banking sector," he further added.

Nifty Outlook

Rajesh Bhosale, Equity Technical Analyst, Angel One said, "Global equity markets were under severe strain, and we experienced one of the steepest declines, dropping below the 24100 mark, which had been a base level for the past month. There was a broad-based sell-off, with support levels breaking easily. The only relief came from prices holding near the 50 EMA around 23900. However, given the strong bearish momentum, this support may be breached in the coming sessions. Traders are advised to avoid attempting to catch the bottom in the short term and should use any rebounds to reduce long positions.'

"In this scenario, 24250 is seen as immediate resistance, while overcoming the bearish gap left today between 24350 and 24700 would be a daunting task. On the downside, 23900 followed by 23600 (the 38.2% retracement of gains from the election day low) are immediate support levels. The key support would be around 23400-23300, aligning with the 89 EMA and the 50% retracement of the mentioned upmove. Traders should monitor these levels and adjust their trades accordingly. One of the key highlights of the day was India Vix spiked by 42% to surpass the 20 mark, expect the Volatility to remain on the higher side, so it is advisable to manage risk carefully and stay informed about global developments, as they are likely to influence our markets in the near term," he further added.

Stocks To Buy Today

Sumeet Bagadia, executive director of Choice Broking, recommended buying two technical stocks on Tuesday, August 6.

PCBL

Buy PCBL in cash @ 384.35, STOP-LOSS: Rs 371, TARGET: Rs 403

PCBL daily chart analysis offers a favourable view for the following week, indicating a steady higher advance. Notably, the stock has produced a notable higher high and higher low pattern, and the company's recent upward swing has effectively violated the neckline, establishing a new week high. This breakthrough indicates the possibility of a significant follow-through upward increase in the stock price.

Adding to the positive momentum, there has been an increase in trading volume, indicating growing market interest. The stock formed a strong bullish candle signifying a potential continuation of the uptrend following and the daily strength indicator RSI (14) is moving upwards and positioned above its reference line indicating a positive bias.

Furthermore, PCBL is currently trading above its crucial 20-day, 50-day, and 100-day Exponential Moving Average (EMA) levels, reinforcing the bullish trend. Given the overall chart pattern, the analysis suggests a favourable long trading opportunity for investors.

Based on the above analysis we recommend buying PCBL in cash at CMP of 384.35 for the target of 403 with a stop loss of 371.

Lux Industries

Buy LUXIND in cash @ Rs 2268.35, STOP-LOSS: Rs 2190, TARGET: Rs 2390

LUXIND is presently trading at 2268.35 levels. On the daily chart, the stock has formed a strong bullish momentum candle, signifying a resurgence of strength in its price action.

A robust support level is situated at 2190 levels. This confluence of support factors enhances the stock's stability and resilience.

Furthermore, LUXIND is trading above all the important moving averages, which underscores its overall bullish posture and trend.

The Relative Strength Index (RSI), a momentum indicator, is hovering around 78 levels. This RSI reading suggests that the stock possesses considerable strength and also It signifies a healthy and sustainable uptrend.

A minor resistance level is noticeable in the vicinity of 2300 levels. Once the stocks successfully surpass this resistance, it has the potential to advance towards the target level of 2390. This could present a favourable trading opportunity for investors and traders alike.

Based on the above analysis we recommend buying LUXIND at CMP of 2268.35 with a SL of 2190 for the target of 2390.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.