Technical Trade Call: 2 Stock Picks By Sumeet Bagadia On Friday, 29th Dec

Nifty started Thursday's trading session higher but steadied throughout the day to settle at 21,779, up 124 points. Nifty reached a new high of 21,801.45 during the session, demonstrating a significant gain of 0.57% and continuing its upward trend. Meanwhile, Sensex began at 72,262.67, up from the previous wrap-up of 72,038.43, and reached a new high of 72,484.34 during the day. At 72,410.38, the index closed with a gain of 372 points, or 0.52 per cent.

Coal India, NTPC, M&M, BPCL, and Hero MotoCorp were the top gainers on the Nifty, while Adani Enterprises, Eicher Motors, LTIMindtree, L&T, and Adani Ports were the top losers. All sectoral indices closed the day in the green, with the exception of consumer durables and information technology. Oil and gas gained the most, followed by FMCG, pharma, and metal. On the broader market front, the BSE Midcap index added 0.66% while the SmallCap index ended the day 0.23% higher.

Market Outlook

"A range bound activity was observed on the last monthly expiry of the calendar year. Nifty50 advanced by 123.95 points and ended the day at 21,778.70. Except for IT, all other sectors ended the session in green with Energy (OMC stocks) and FMCG being the outperformers followed by Pharma and PSU Banks. A mixed trend was seen in the Broader markets where Midcap performed in line with the Benchmark Index while Small Caps outperformed.

One more bullish candle was formed on the daily chart but at the same time, the Index is about to enter an extremely overbought condition as well. There is a possibility of bearish divergence, although it is too premature to say," said Aditya Gaggar Director of Progressive Shares.

Nifty Outlook

"The Futures Open Interest (OI) indicated buildup of long positions in Nifty futures for the fourth consecutive day. The Long-Short ratio, however, fell for the third consecutive day from 66.62% on 21st December to 62.61% on 27th December as the Foreign Portfolio Investors (FPIs) marginally increased their exposure to short positions in Index futures, indicating their bearish view on the market in the short run.

Short covering was observed at 21,500 & 21,600 Strike in Nifty while heavy put writing was seen in 21,700 Strike. The maximum call open interest strike is placed at 22,000 Strike, which will act as a resistance. The option activity at 21,800 Strike is likely to provide cues about Nifty's Intraday direction Friday," said Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities.

"The Donchian Channel, also referred to as the trend-following indicator and the tool for identifying bullish and bearish extremes, shows that the Nifty undertone remains bullish. Nifty is trading above all key moving averages and holds strong support around 21,650 levels. RSI is comfortable holding 78 levels indicating bullish strength. According to Bollinger band, if the Index crosses 21,830 levels we could expect the rally to extend up to 21,910-21,970 zone," stated Om Mehra, Technical Analyst, SAMCO Securities.

Bank Nifty Outlook

"Bank Nifty ended the day at 48,508.55 with a gain of 0.47 % pushed higher by private and public sector banking stocks combined. According to Fibonacci retrenchment, 48,100 holds strong support, while resistance is placed at 48,880 levels for the index," added Om Mehra.

"Bank Nifty moved sideways throughout the day and closed 226 points higher at 48,509. The put writers dethroned the call writers from the 48,500 Strike in Bank Nifty. Bank Nifty has formed a doji candle, which signifies indecision, on the daily chart. The option activity at 48,500 will provide cues about Bank Nifty's Intraday direction Friday," stated Ashwin Ramani.

Stocks To Buy

The executive director of Choice Broking, Sumeet Bagadia, recommended buying two stocks on Friday, December 29. Sona Blw Precision Forgings and Teamlease Services have the following entry price, stop loss, and target price.

Sona Blw Precision Forgings

Buy SONACOMS in cash @ Rs 631, stop-loss: Rs 614, target: Rs 670

SONACOMS, currently trading at Rs 631, has formed a cup-and-handle breakout on the daily chart, accompanied by significant trading volume. The prevailing price signals robust bullish momentum, with expectations of a sustained upward movement towards the Rs 670 level. Conversely, substantial support is evident near Rs 614.

Furthermore, SONACOMS is trading above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, 100-day, and 200-day EMAs, indicating robust bullish momentum and suggesting the potential for further upward price movement. The Relative Strength Index (RSI) is presently at 66.8, showing an upward trajectory and indicating increasing buying momentum.

Additionally, the Stochastic Relative Strength Index (Stoch RSI) exhibits a positive crossover. These technical indicators collectively suggest that SONACOMS may have the potential to reach a target price of Rs 670 in the near term.

To manage risk effectively, it is advisable to set a stop-loss (SL) at Rs 514 to safeguard the investment in the event of an unexpected market turn. A prudent strategy would be to consider buying on dips at levels of Rs 625.
Overall, considering the technical analysis and current market conditions, SONACOMS presents a promising buying opportunity for those aiming for a Rs 670 price target, provided that prudent risk management measures are in place.

Teamlease Services

Buy TEAMLEASE in cash @ Rs 3225, stop-loss: Rs 3133, target: Rs 3396

TEAMLEASE has recently formed a rounding bottom pattern on the daily chart, indicating a potential bullish reversal. This pattern is supported by substantial trading volume, which increases the probability of a robust upward movement. If the stock breaches the 3230 level, there is potential for it to ascend towards 3396. On the flip side, a notable support level is identified around 3133.

Additionally, TEAMLEASE is currently trading above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, and 200-day, signaling robust bullish momentum. The Relative Strength Index (RSI) is presently at 70, indicating an upward trajectory and suggesting buying momentum.

Considering the comprehensive analysis, it is advisable to contemplate initiating a buy position in TEAMLEASE in the cash segment at the prevailing market price (CMP) of 3225. The target for this position is set at 3396, while a prudent stop-loss order is recommended at 3133.

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.