Trade Call: 2 Stock Picks By Sumeet Bagadia of Choice Broking On Monday, 29th Jan

Prior to the US Federal Reserve's interest rate announcement on Wednesday, which is anticipated to maintain the status quo, domestic stock markets resumed their pattern of sell-off pressure and saw another decline on Thursday, January 25, the monthly F&O expiry day. The BSE Sensex dropped by 359.64 points, or 0.51 per cent, to settle at 70,700.67 in the last trading session on January 25. The Nifty 50 closed below the 21,400 level triggered by continued selling pressure by FIIs as well as downward pressure on IT and Private Banks resulting from Q3 results of Tech Mahindra, Axis Bank and HDFC Bank which failed to meet expectations.

Nifty Outlook

Rupak De, Senior Technical Analyst, LKP Securities said, "A tough battle unfolded in the market as the Nifty remained highly volatile throughout the day. The sentiment may continue to lean towards the bears as the Nifty struggled to surpass the 21500 mark, where call writers held substantial positions. Looking ahead, the trend is likely to remain sideways, fluctuating within the range of 21300 and 21500. Nevertheless, a decisive breakthrough above 21500 could propel the index towards 21700/22000 in the short term."

Bank Nifty Outlook

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities said, "The bulls successfully defended the crucial support level of 44500, establishing it as a critical line of defense. If the index sustains above this support, a potential pullback rally towards the resistance levels of 45500/46000 is anticipated in the near term. However, a breach below this support on a closing basis could lead to further downside pressure, with the index targeting levels around 44000-43500."

Weekly Market Outlook

Vinod Nair, Head of Research, Geojit Financial Services said, "In response to a mixed global market trend, the retreat in the market was pronounced, with significant declines in IT and banking stocks. Despite encouraging Indian PMI data, the market struggled to rally. This downturn was due to apprehensions about the impending rate decisions from the ECB, which is expected to maintain current rates. Anticipation of the Fed policy meeting next week, likely retaining the existing rate, triggered increased US bond yields and FII selling in the market."

"While US PMI figures were positive, all eyes are on today's release of US GDP data and jobless claims, shedding light on the US economy and potential policy rate decisions. Notably, the PBOC's 0.5% cut in the reserve ratio, aimed at stimulating growth and financial liquidity, provided short-term support to the domestic market this week. Investors, however, await additional details on China's comprehensive stimulus plans.

The broader market is unable to hold gains due to high valuations, subpar results, and persisting geopolitical tension in the Middle East, followed by an F&O expiry weighing down the market. Going forward, global market factors like the policy rate decisions of major countries will affect the market, and markets are likely to witness stock-specific actions during the ongoing earnings season," he further added.

Stocks To Buy On Monday

Executive director of Choice Broking Sumeet Bagadia recommended buying two stocks on Monday, January 29. Following is the technical analysis for Ambuja Cements and NMDC.

NMDC

Buy NMDC in cash @ Rs 217.10, stop-loss: Rs 209, target: Rs 232

In recent market developments, NMDC has undergone a noteworthy transformation as revealed by its daily chart analysis. The formation of a dragonfly doji candlestick pattern on the daily chart signifies a significant shift in market dynamics, transitioning from a phase of minor declines and sideways consolidation to a promising upside bounce. The ongoing trading session further supports this positive trend, showcasing an upward movement that potentially signals an impending breakout from a narrow-range momentum.

The development is substantiated by key technical indicators, particularly the Relative Strength Index (RSI) at 59, which not only underscores NMDC's positive momentum but also highlights the stock's resilience. Additionally, NMDC is trading above crucial moving averages, including the 20-day, 50-day, and 100-day Exponential Moving Averages (EMA), indicating sustained strength in its price action.

In light of this analysis, we recommend a strategic move to buy NMDC in cash at the current market price (CMP) of 217.10, with a target set at 232 and a stop loss at 209. This approach aims to capitalize on the observed positive market indicators and anticipates potential upside movement in NMDC. Investors are encouraged to consider this strategic buying opportunity, aligning with the positive short-term trend and the overall strength depicted in NMDC's recent market performance.

Ambuja Cements

Buy AMBUJACEM in cash @ Rs 565, stop-loss: Rs 554, target: Rs 584

AMBUJACEM is currently trading at Rs 565. After a period of small falls and sideways consolidation, the stock has lately broken the neckline levels of Rs 555 and is rising quickly on the upside with substantial volume. There are expectations of further upward movement, potentially reaching Rs 584 levels. On the downside, substantial support is evident near Rs 554.

Furthermore, AMBUJACEM is trading above key Exponential Moving Averages (EMAs), including the 20-day, 50-day, 100-day, and 200-day EMAs. This suggests a strong bullish momentum, indicating the potential for continued upward price action. The Relative Strength Index (RSI) stands at 67, signalling an upward trajectory and confirming an increase in buying momentum.

In summary, considering the technical analysis and prevailing market conditions, AMBUJACEM appears to present a promising buying opportunity for those targeting a Rs 584 price objective, contingent upon the implementation of prudent risk management measures.

To manage risk effectively, it is advisable to set a stop-loss (SL) at Rs 554 to protect the investment in case of an unexpected market reversal.

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.