Trade Call: 2 Technical Stock Picks By Sumeet Bagadia On Tuesday, 23rd Jan

The benchmark indices saw volatility throughout the special trading session on Saturday, which led to the closing session's entry into negative territory. The Sensex closed at 71,423.65, down 259.58 points or 0.36 per cent, and the Nifty closed at 21,585.70, down 36.70 points or 0.17 per cent.

HUL, M&M, TCS, IndusInd Bank, and HCL Technologies were among the top Nifty losers; winners were Coal India, Adani Ports, Adani Enterprises, Kotak Mahindra Bank, and ICICI Bank. PSU Bank was the primary gainer in terms of sectors, while the FMCG industry was the one that suffered the most. As the BSE Midcap and Smallcap indices climbed by 0.4 per cent apiece, broader benchmark indices ended the day higher.

Markets Consolidate At Lower Levels

According to Mr. Ashwin Ramani, Derivatives & Technical Analyst, SAMCO Securities, "Nifty opened with a gap up in a special trading session on Saturday but traded sideways to down throughout the day to close 77 points lower at 21,572. The Long-Short ratio fell further to 46.95% on Friday, (January 19) from 49.09% on Thursday (January 18), as FPIs continued to liquidate their long positions and aggressively build short positions in Index futures.

The FPIs now hold more short positions relative to long positions in Index futures. Strong put writing (bulls' entry) with call writers exiting (bears exit) was observed at 21,500 & 21,600 Strike in Nifty. Strong put writing at a particular strike price, is usually considered as a sign of support getting stronger and stronger possibility of price moving higher. The option activity at 21,500 Strike will provide cues about Nifty's direction in the coming days. If put writers exit from the 21,500 Strike, the fall can extend further until 21,000 levels."

On the outlook of Bank Nifty, Ashwin Ramani said, "Bank Nifty opened with a gap up but remained sideways throughout the day and added 1 point to its previous close to end at 46,058. Call writers exiting (bears exit) was observed at 45,800 & 45,000 Strike in Bank Nifty, which kept the Index above 45,900 levels. Both the call & put writers battled out at 46,000 Strike in the Index and the option activity at 46,000 Strike will set the tone for future movement in Bank Nifty."

Nifty Posts Weekly Losses; Next Week Being Truncated To See High Volatility

Om Mehra, Technical Analyst, SAMCO Securities said, "Nifty concluded the week at 21,571.80, marking a decline of 323 points (down 1.47%) from 21,894 levels, on a weekly basis. Pharma, realty, and metal sectors faced selling pressure. Despite persistent attempts to breach crucial resistance each of them resulted in a sell-off. The market exhibited a consolidative trend within the 21,500-21,750 range, indicative of a sideways movement going ahead. Weekly support stands firm at 21,400 levels while the upper Bollinger band poses resistance at 21,850. Globally US and European markets experienced some late-week selling, potentially influencing profit-booking sentiments in the Indian market."

On the outlook of Bank Nifty, Om Mehra added "During the week, Bank Nifty experienced a notable 3.36% loss, closing at 46,058.20. The key technical indicator, the 20-day Simple Moving Average (SMA), stands at 47,100, serving as a formidable resistance level. Additionally, the 200-day Moving Average (DMA) at 44,500 acts as a critical support with a breach below this level could intensify selling in the index."

"Noteworthy is the robust performance of the PSU Bank stocks, which recorded a commendable 3.36% gain during the week. This surge played a pivotal role in bolstering bullish sentiment across banking stocks. Pre Budget sentiment might lead to more volatility in the coming week, which is now truncated by one more day and next trading week will have only three trading sessions as Markets will remain closed for trading on Monday," he further stated.

Stocks To Buy

Monday, January 22, will see the closure of the Indian stock market in observance of the national holiday set aside for the "Pran Pratishtha" event conducted at the Ram Temple in Ayodhya. On Tuesday, January 23, Sumeet Bagadia, executive director of Choice Broking, recommended purchasing two stocks. The technical analyses of IRB Infrastructure Developers and Colgate-Palmolive (India) are provided here.

Colgate-Palmolive (India)

Buy COLPAL in cash @ Rs 2536.2, stop-loss @ Rs 2503, target @ Rs 2596

COLPAL is exhibiting strong bullish momentum, currently trading at an all-time high of 2550 levels. The recent breakout above the crucial resistance at 2525 levels is a significant technical development, supported by robust trading volumes, reinforcing the strength in the stock. The breakthrough suggests a potential continuation of the upward trend, offering an optimistic outlook for investors.

Additionally, COLPAL is trading above key moving averages, including the short-term (20 Day), medium-term (50 Day), and long-term (200 Day) EMAs, further affirming its bullish stance. The momentum indicator, Relative Strength Index (RSI), is at 64 levels.

For traders, keeping an eye on the strong support near 2503 levels is advisable, as a breach of this level could signal a shift in sentiment. Overall, COLPAL current technical setup suggests a favourable environment for further upside potential, provided traders and investors remain vigilant to potential reversals and closely monitor key support and resistance levels.

Based on the above analysis we recommend buying COLPAL and the CMP of 2536.2 with a stop loss of 2503 for the target of 2596.

IRB Infrastructure Developers

Buy IRB in cash @ Rs 49.25, stop-loss: @ Rs 48.75, target @ Rs 51.15

IRB is currently trading at 49.25. The stock has consistently found support around the 48.75 level, establishing it as a reliable support zone. The anticipated trading range for the stock is expected to be between 48 and 50, with the possibility of sideways movement within this range. A decisive close above the 49.55 level could propel the stock towards the 51.15 level in the coming days.

The Relative Strength Index (RSI) for IRB is at 69, indicating potential upside. Additionally, the Stochastic RSI shows a positive crossover, further confirming the bullish sentiment. Notably, the stock is trading above all significant moving averages, highlighting its overall strength.

Considering these technical indicators and the current market conditions, it appears to be an opportune moment to consider buying IRB at the current market price of 49.25. A reasonable target for this trade could be set at 51.15, with a recommended stop-loss at 48.75 to manage potential risks.

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.