Trade Call: 4 Technical Stock Picks By VLA Ambala On Tuesday, 6th Feb

The stock market experienced resistance during the Intraday trading, with major indices witnessing a decline of nearly 0.50% each on Monday. The sell-off was mainly accredited to the underwhelming performance of Reliance Industries.

The sole reason for the giant conglomerate stock's decline was a response to the news of the government increasing windfall tax on domestically produced crude oil to Rs. 3,200 per tonne from Rs. 1,700 per tonne, effective from Saturday. This again was a direct response to the rising oil prices after OPEC+ decided to keep its oil output policy unchanged.

Notably, mixed cues were observed across different sectors in the Indian stock market, with metal, energy, pharma, realty, and auto sectors ending the day in green. However, FMCG, the media, and the consumption sectors ended the day on a bearish note. Meanwhile, the other Asian markets traded with mixed sentiments, and the US market traded on a bullish note.

Stock Market Outlook - In Brief

The Nifty recently formed a bearish chart pattern - 'Double Top' at the daily timeframe. In addition, its current relative strength index (RSI) stands at 55 on the daily, 68 on the weekly, and 72 on the monthly time frame. This signals the prevalence of overbought conditions on the higher timeframe. Regardless of this indication, the Nifty closed the day in the negative region amid selling pressure. It should be noted that a bearish candlestick pattern - 'Bearish Belt Hold' formed during the daily timeframe and also emerged in the previous weekly candlestick. Notably, such a candlestick pattern takes place at the peak of an uptrend and indicates a shift in the overall market sentiment from bullish to bearish.

The current price is trading at 21,761, and it is expected that the same will open with a deep gap ranging that could be anywhere between 0.50% to 1%. However, a flat opening may find support at the previous day's low. However, the failure to hold that level could trigger sustained selling sentiment in the stock market. Notably, the major support has shifted to the 21,410-21,220 range on the weekly timeframe.

The highlight was the fintech stock Paytm recording a whopping 50% slump in just three trading sessions. The fintech is currently facing strong opposition owing to the strict actions from the Reserve Bank of India and has been restricted from acquiring any new business. As a result, the company's fundamentals have weakened significantly. My advice for those holding the Paytm stock is to consider planning their exit around the 400 range, which has been deemed as the last support level for the stock.

Amid these factors, the stock market ended the day in a state of 'Extreme Fear,' with the Market Mood Index pointing at 37.35, indicating a somewhat neutral sentiment among the traders. On the other hand, the NSE India VIX closed at 15.62, signalling a moderate level of volatility. In this situation, my advice for traders and investors would be to maintain a cautious approach and look for high-quality stocks that are stable and lucrative. They should also emphasize diversifying their portfolio even for short-term investments to make the most of the ongoing and upcoming market trends.

Key Levels to Watch Out For on 6th Feb 2024

The Nifty's support range is expected to lay between 21700 and 21610, while the major resistance point for the intraday could be between 21830 and 21950. In the case of the Bank Nifty, the intraday support levels could be between 45650 and 45100, with resistance standing between 45850 and 46060.

Stocks To Buy Today

Stocks to Buy or Sell Today: VLA Ambala (SEBI Regd. Research Analyst) recommends traders and investors keep a close eye on four stocks to buy on - February 6, 2024. As per her analysis, MAGNUM, 63MOONS, V2RETAIL, and HEG have room for growth, making them lucrative options.

Magnum Ventures

Buy - Rs. 70, Target - Rs. 74/77/80/85/90/95/100, and Stop loss - Rs. 64

63 Moons Technologies

Buy - Rs. 440, Target - Rs. 480/500/520/550/580, and Stop loss - Rs. 395

V2 Retail

Buy - Rs. 360, Target - Rs. 400/440/480/500/520/550, and Stop loss - Rs. 310

HEG

Buy - Rs. 1850, Target - Rs. 1940/1980/2100/2200, and Stop loss - Rs. 1720

Note V.L.A. Ambala emphasizes that these recommendations are based on price movement, past behavior, and technical analysis.

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.