Sumeet Bagadia of Choice Broking Recommends 2 Stocks To Buy On Monday, 21st Aug

Due to excessive volatility and weak global signals, benchmark indices ended the week down. The Sensex closed Friday down 202.36 points, or 0.31 percent, at 64,948.66, while the Nifty ended down 55.10 points, or 0.28 percent, at 19,310.20. Hero MotoCorp, TCS, Coal India, Hindalco Industries, and Tech Mahindra were among the major losers on the Nifty, while Adani Enterprises, Adani Ports, Eicher Motors, Maruti Suzuki, and Nestle India were among the gainers.

Market Outlook

"The market ended the week lower after a slight recovery led by Reliance as it announced the listing date of Jio Financials on Aug 21. Benchmark Indices ended lower for the fourth Week in a row, the longest stretch of weekly declines in over last 16 months. Most sectors were in red this week led by Metal, Bank and IT, while only Media, FMCG and Auto sectors ended in green this week. India's WPI inflation remained in the negative zone for the fourth month in a row by contracting to 1.36% in July after contracting by 4.12% in June, which was the lowest in more than seven-and-a-half years. The decline was mainly due to a fall in the prices of basic metals, mineral oils, textiles, chemical & chemical products and food products," said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

"India's retail inflation in July surged to a 15-month high at 7.44% primarily driven by a rise in Food prices especially vegetables, which is above RBI tolerance levels and we believe that rate hikes in the near term remain unlikely. Monsoon has been deficient in August so far, which may put pressure on food prices, therefore inflation is expected to remain high. India's trade deficit widened to $20.67bn in July from $20.13bn in June. Both exports and Imports declined with exports declining by 16% to $32.25bn in July while Imports declined by 17% to $52.92bn. It is expected that India's trade deficit to narrow in the coming years, driven by strong performance in services exports," said Arvinder Singh Nanda.

"RBI in its August Bulletin mentioned the industrial production and trade weakening, the slowing of global recovery after a robust performance in Q1. Despite sharp increases in prices, the risk of stagnation, weak growth and high inflation remains low in India. The Indian economy is gathering momentum in Q2FY24 with headline inflation expected to average above 6%. On the global front, UK CPI inflation dropped sharply to 6.8% YoY in July and core CPI at 6.9% YoY. Euro Area GDP for April- June Quarter increased by 0.3% QoQ and 0.6% YoY.

Japan's exports shrank for the first time in more than two years and fell by 0.3% YoY," said Arvinder Singh Nanda.
"US Industrial production in July rose 1% from a month earlier. Manufacturing Output rose 0.5% in July from the previous month. Capacity utilisation which indicates overall growth and demand in the economy gained 0.7% and went up to 79.3% in July. US initial jobless claims fell by 11000 at 2.39lakh for the week ended Aug 12 from the previous week. According to the FOMC meeting minutes, Fed may not be done with rate hikes and may hike interest rates again," said Arvinder Singh Nanda.

"The market will react to some key global and domestic events such as US existing Home Sales, Building permits, S&P Global US manufacturing and services PMI data, New Home sales, Initial Jobless claims, Core durable goods orders, Crude oil inventories, Eurozone S&P global composite PMI, India's forex reserves, RBI MPC Meeting minutes will be in focus," said Arvinder Singh Nanda.
"The NIFTY index has been on a downtrend since reaching its all-time high.

Due to some mounting global headwinds like China's housing crisis, and expectations of further rate hikes in the U.S., prices eased by around 0.60% to settle the week at 19310. Prices are currently forming a descending triangle pattern on the daily chart, a decisive fall below the lower range value will confirm the bearish scenario. Despite this, NIFTY prices have remained higher than their short-term moving averages i.e., the 21 and 55-week EMAs," said Arvinder Singh Nanda.

In contrast, the Bank Nifty seems to be exhibiting greater weakness compared to the NIFTY. It concluded the week below the previous week's low. Furthermore, the Bank nifty briefly trades below the neckline support of a Head & Shoulders Pattern on the daily chart," stated Arvinder Singh Nanda.

Stocks To Buy On Monday

Sumeet Bagadia, Executive Director of Choice Broking has recommended 2 stocks to buy on Monday, 21st August.

ICICI Bank

Buy ICICIBANK in cash @ Rs 950, Stop-loss: Rs 938, Target: Rs 980

Presently trading at 950, ICICI Bank exhibits notable technical indicators that warrant careful consideration. The stock has demonstrated resilience by maintaining a supportive trendline, signifying a robust foundation for its current valuation. Furthermore, its trading position above both the 100-day and 200-day Exponential Moving Averages (EMA) indicates a positive sentiment and reinforces its potential for upward price movement.

The Relative Strength Index (RSI) of 40, while not significantly oversold, presents an opportunity for a potential rebound. This aligns with the observed consolidation around the 945 level over the past week, indicating a stabilization phase that could precede a bullish breakout.

Given these insights, the proposition to initiate a long position at 950 holds merit. This entry point appears strategically aligned with potential price appreciation towards a target of 980. To prudently manage risk, a stop-loss order at 938 is advised, thereby mitigating potential downsides associated with unexpected market fluctuations.

Bharat Forge

Buy BHARATFORG in cash @ Rs 970.75, Stop-loss: Rs 935, Target: Rs 1020

BHARATFORG has bounced back from the support of 936 levels which was prior a resistance. Currently, the stock is trading around 970.75 levels. The stock is trading above all important moving averages indicating strength. The RSI indicator is also trading near to 68 levels which will help stock to move upwards. A small resistance is placed at 983.5 levels which is also all-time high level for the stock. Once stock closes above the mentioned resistance level it can move towards the new all-time high level of 1020 and above.
Based on the above analysis BHARATFORG can be purchased at CMP of 970.75 with a SL of 935 levels for the target of 1020 levels.

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.