Trade Call: 2 Stock Picks By Sumeet Bagadia On Budget Day, 1st Feb

Indian benchmark indices had a rough start to the day but closed higher on Wednesday ahead of today's major domestic budget and key US Fed policy rate decision. The Nifty surged 203.60 points or 0.95 per cent to close at 21,725.70, while the Sensex gained 612.21 points or 0.86 per cent to settle at 71,752.11.

The most significant Nifty gainers were Sun Pharma, Divis Labs, Eicher Motors, Dr. Reddy's Laboratories, and Tata Motors; the most significant losers were L&T, Titan Company, Tata Consumer, and BPCL. All sectors ended in green with pharma as the top gainer followed by realty and PSU Bank. Broader indices BSE Midcap and BSE SmallCap added 598.62 points (1.57%) and 821.68 points (1.83%) respectively.

Nifty Outlook Today

Rupak De, Senior Technical Analyst, LKP Securities said, "The Nifty has formed a Piercing Line pattern on the daily chart, following a dark cloud cover in the preceding trading session. This consecutive complete reversal pattern indicates a highly volatile market sentiment. The trend may continue to be volatile on Thursday, especially as the interim budget will be delivered. Support on the lower end is situated at 21500, while a decisive move above 21750 might trigger a rally towards 22100 and beyond."

Bank Nifty Outlook

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities, stated ""The Bank Nifty bulls made a robust comeback a day before the budget, surpassing the immediate hurdle at 45500. The index now faces the next resistance at 46500, and a decisive break above this level could potentially reverse the entire trend for the index. On the downside, the immediate lower-end support is positioned at 45700, and breaching this level may signal a resurgence of bearish control in the market."

Traders Becomes Fence Sitters Ahead of Budget

According to Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, Nifty shrugged off its initial weakness and rose sharply on Intraday basis to close at 21,726, up 204 points.

The Long Short ratio dipped marginally from 22.64% on 29th January to 22.03% on 30th January as Foreign Portfolio Investors (FPIs) activity remained subdued in Index futures.

Strong put writing (bulls' entry) with call writers (bears) exiting was observed at 21,500 Strike in Nifty. Put writing at a particular strike price, is usually considered as a sign of support getting stronger and strong possibility of prices moving higher. The put writers have further strengthened their position at 21,500 Strike in Nifty. The 21,500 Strike on the downside & the 21,800 Strike on the upside will be the two key levels to watch out ahead of the budget announcement today.

Bank Nifty broke the 45,500 deadlock and rose sharply on Intraday basis to close at 45,997, up 629 points. Strong put writing & call writers exiting was observed at all Strikes from 45,400 to 45,800. The call & put writers battled out at 46,000 Strike in Bank Nifty with the bulls leading the bears by a thin margin. The 45,500 Strike on the downside & the 46,000 Strike on the upside will be the two key levels to watch in Bank Nifty on the budget day (today).

Optimism Prevails At Dalal Street Ahead of Budget

Om Mehra, Technical Analyst, SAMCO Securities said, as January wraps up, Nifty exhibited a Doji candle on the monthly chart. The index concluded at 21,725.70 reflecting a modest intraday gain of 0.95%.

Recent sessions saw a tug-of-war between the Bulls and Bears, marked by a bearish dark cloud pattern followed by a bullish piercing pattern on the daily chart. Amidst this volatility, positive market breadth prevails, setting the stage for two critical events-the Interim Budget on Thursday and the possibility of an announcement from US Federal Reserve on interest rate change (early 'Thursday morning IST).

Despite the conflicting signals from technical patterns, market participants are keenly observing the crucial support level at 21,450 and the resistance at 22,000 levels.

Bank Nifty surged impressively by 1.39%, concluding at 45,996.80 and forming a strong bullish daily candle. Despite this upward momentum, the RSI indicator remain positioned below the average line. The 20 DMA also plots immediate resistance as well. Market participants anticipate a decisive directional shift only if the 46,600 range is taken out. The volume profile indicates immediate support at 45,000 levels in Bank Nifty.

Stocks To Buy Today

On Budget Day 2024, Executive Director of Choice Broking, Sumeet Bagadia has recommended the below stocks to buy.

Sanofi India

Buy SANOFI in cash @ Rs 8650, stop-loss: Rs 8580, target: Rs 8888

SANOFI is currently trading at Rs 8650. After a period of small falls and sideways consolidation, the stock has lately broken the neckline levels of Rs 8600 and is rising quickly on the upside with substantial volume... There are expectations of further upward movement, potentially reaching Rs 8888 levels. On the downside, substantial support is evident near Rs 8555.

Furthermore, SANOFI 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 66, signalling an upward trajectory and confirming an increase in buying momentum.

To manage risk effectively, it is advisable to set a stop-loss (SL) at Rs 8580 to protect the investment in case of an unexpected market reversal.

In summary, considering the technical analysis and prevailing market conditions, SANOFI appears to present a promising buying opportunity for those targeting a Rs 8888 price objective, contingent upon the implementation of prudent risk management measures.

National Aluminium Company

Buy NATIONALUM in cash @ Rs 149.75, stop-loss: Rs 147.75, target: Rs 154

The daily chart analysis of NATIONALUM reveals a promising outlook for the upcoming week, signalling a sustained upward movement. Notably, the stock has formed a significant higher high and higher low pattern, and the recent upward swing has successfully breached the neckline, establishing a new week high for the stock. This breakout suggests the potential for a substantial follow-through upward movement in the stock price.

Adding to the positive momentum, there has been an increase in trading volume, indicating growing market interest. The Volume Weighted Average Price (VWAP) for short term is 147.2. And NATIONALUM stock is trading above this level this is a good sign for the stock and it could move higher. VWAP is rising upwards. Furthermore, NATIONALUM is currently trading above its crucial 20-day, 50-day, and 200-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 NATIONALUM in cash at CMP of 149.75 for the target of 154 with a stop loss of 147.75.

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.