Trade Call: 2 Stock Picks By Sumeet Bagadia For Monday, 5th Feb

Benchmark indices concluded Friday's trading session higher following a two-week correction, ahead of the RBI's policy meeting next week. Nifty gained 156.30 points, or 0.72 per cent to close at 21,853.80, while the Sensex gained 440.33 points, or 0.61 per cent to settle at 72,085.63. Nifty climbed by 1.43% while the Sensex jumped by 0.92% during the interim budget week.

BPCL, Power Grid Corporation, ONGC, Adani Ports, and NTPC were the top gainers on the Nifty during Friday's closing session, while Eicher Motors, Axis Bank, HDFC Life, HDFC Bank, and HUL were the top losers. On the sectoral front, oil & gas was the top gainer followed by metal, PSU Bank and IT sectors whereas the major losers were private banks followed by the bank and FMCG sector.

Weekly Market Outlook

"After a correction of two weeks, the Bulls are back with a strong candlestick formation known as Above The Stomach (Weekly Chart); however, on the daily chart, the Index has formed a Shooting star candle at record levels with a bearish divergence in RSI.

Considering the larger picture; the trend is positive with the downside protected at 21,700-21,645 while on the higher side, a convincing close above 22,100 is a must. BankNifty moved in tandem with the Index and outperformed as well but to extend its positive momentum, a strong move above 46,600 is required; and on the flip side, 45,700 will act as a strong support. Consolidation of 5 weeks in the Auto sector comes to an end with a congestion breakout (Hero Motocorp- Strong Momentum, Maruti-Pullback completed)," said Aditya Gaggar, Director of Progressive Shares.

"All our recommendations from the Energy segment performed on expected lines and we continue to hold our positive stance on the same (HPCL, ONGC, and Reliance). Profit booking correction can be expected as the sector is trading at highly overbought condition but the undertone will remain positive. Not only the Metal sector but many of its components have given a strong breakout which is pointing toward an elongation of an up-move. Positive on Jindal Steel (Pennant and Pole Breakout), NMDC (Triangle Breakout), and SAIL (Flag and Pole Breakout). With a massive breakout, the PSU Banking sector was the outperformer of the week; investors can opt to buy on dips strategy in it," stated Aditya Gaggar.

Nifty Outlook

Rupak De, Senior Technical Analyst, LKP Securities said, "Nifty surpassed the 22,000 mark during the first half of the Friday session but subsequently formed a double top on the hourly chart. Confirmation of a bullish trend resumption would only occur with a decisive breakout above the double top, which is currently identified around 22,125. Conversely, a break below the support level at 21,500 could indicate a bearish momentum. In the scenario of a breakout above 22,150, Nifty may experience upward momentum, potentially reaching levels such as 22,500 and beyond."

Bank Nifty Outlook

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, "The Bank Nifty bears regained control as the index failed to surpass the crucial level of 46500 on a closing basis. The immediate support for the index is situated at 47700, and a breach below this level is anticipated to intensify selling pressure, potentially pushing the index towards the 45000 mark. Given the heightened volatility in the near term, traders are advised to approach the market with caution and implement strict risk management measures to navigate potential fluctuations."

Stocks To Buy On Monday

On Monday, February 5th, Choice Broking's Executive Director Sumeet Bagadia made buy recommendations for the shares of Havells India and Reliance Industries.

Havells India

Buy HAVELLS in cash @ Rs 1341.30, stop-loss: Rs 1290, target: Rs 1410

In the realm of equity markets, HAVELLS, currently positioned at 1314.30 levels, showcases a robust technical stance with a comfortable position above key Exponential Moving Averages (EMAs), including the 200-day indicators. The recent consolidation phase observed hints at a potential upward movement, further emphasized by the presence of a bullish candlestick pattern on the daily charts.

An important highlight is the emergence of a modest resistance zone at 1370 levels, serving as a critical juncture for HAVELLS. A successful breach of this resistance could propel the stock towards the target of 1410 levels and potentially beyond. Investors are strongly advised to closely monitor the stock's performance around this resistance, as it significantly influences the sustainability of the positive momentum in the short term.

Considering this insightful analysis, a prudent strategy might involve contemplating the purchase of HAVELLS at the current market price (CMP) of 1341.30. To manage risk effectively, setting a stop-loss at 1290 provides a protective measure. Simultaneously, aiming for a target of 1410 aligns harmoniously with the potential upward movement indicated by the technical analysis. This strategic approach is crafted to capitalize on the observed positive market conditions, presenting investors with a well-defined plan for entry, risk management, and target achievement within the context of HAVELLS's existing trading scenario.

Reliance Industries

Buy RELIANCE in cash @ Rs 2915.40, stop-loss: Rs 2810, target: Rs 3050

In the dynamic landscape of equity markets, RELIANCE, a prominent player currently positioned at 2915.40 levels, has captured attention with its robust technical stance. The stock maintains a comfortable position above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, and 200-day indicators. This technical strength is further accentuated by a recent surge in both price and volume, suggesting a potential upward movement in the near future. The bullish sentiment is underscored by the presence of a compelling candlestick pattern on the daily charts.

An essential aspect to watch is the emergence of a modest resistance zone at 2960 levels, acting as a pivotal juncture for RELIANCE. A successful breach of this resistance could serve as a catalyst, propelling the stock towards the targeted levels of 3050 and potentially beyond. Investors are advised to keenly observe the stock's performance around this resistance, recognizing its significance in determining the sustainability of the positive momentum in the short term.

Delving into the strategic implications of this analysis, investors might consider a prudent approach involving the purchase of RELIANCE at the current market price (CMP) of 2915.40. To effectively manage risk, setting a stop-loss at 2810 is recommended, providing a protective measure against potential downturns. Simultaneously, aligning with the potential upward movement indicated by the technical analysis, investors could set a target of 3050. This strategic framework aims to capitalize on the observed positive market conditions, offering investors a well-defined plan for entry, risk management, and target achievement within the context of RELIANCE's existing trading scenario.

In conclusion, as investors navigate the complexities of the equity market, staying attuned to the technical indicators and strategically planning entry and exit points becomes paramount. The analysis of RELIANCE presented here serves as a guide for investors seeking to leverage the current market conditions and make informed decisions in pursuit of potential gains.

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.