Last week, one day ahead of the Union Budget, the recovery mode started for the market. After a good up move of nearly 500 points in just five days, the rally halted on the day of RBI Monetary Policy meet outcome.
It was quite surprising to see a massive sell-off on the following day, despite RBI cut the repo rate by 25bps and changed the stance to neutral. The selling aggravated in the last hour of the week to shave off a decent portion of intraweek gains.
The first half of the week gone by has been fantastic for benchmarks. In the process, Nifty managed to surpass its multi-month hurdle of 11,000.
In this move, the broader market continued to underperform but on February 7, the index consolidated and there were some early signs of revival in many individual pockets.
This ecstasy did not last long as we saw yet another bout of selling across the board on February 8 to conclude the week with a lot of ambiguity. Going ahead, if the market has to see a robust move, it would be very important for other pockets to participate as well.
As far as levels are concerned, we are still in a relatively safer zone. Going ahead, 10,900–10,850 would be seen as a key support zone. Until Nifty remains above it, there is no reason to worry. On the flipside, 11,041 followed by 11,118 are the levels to watch out for.
At this juncture, a prudent strategy would be to stay light and follow a stock specific approach. One can switch to the aggressive mode only after Nifty surpasses 11,000 along with the broader market participation.
In this scenario, a move towards 11,300–11,400 cannot be ruled out. Only a sustainable move below 10,850 would give a dent to above mentioned optimistic scenarios.
Here are two stocks that could give 7-12 percent return in the next 1 month:
Bajaj Finance: Buy| LTP: Rs 2,702| Target: Rs 2,898| Stop loss: Rs 2,620| Upside: 7 percent
This stock has seen a gradual recovery in the last three months after undergoing a massive price correction in September.
The last couple of weeks has been good for this stock and in this course of action; the stock went on to confirm a breakout from its recent congestion zone around Rs 2,650.
In addition, the ‘RSI-Smoothened’ on the daily chart has surpassed the threshold level of 70, which bodes well for the bulls. We recommend going long for a positional target of Rs 2,898 in the coming days. The stop loss can be placed at Rs 2,620.
Wockhardt: Buy| LTP: Rs 415.15| Target: Rs 468| Stop loss: Rs 395.80| Upside: 12 percent
It may sound an extremely contradictory call but looking at recent developments, we are inclined to do so. Due to recent sharp selloff, the stock prices has entered the deeply oversold territory.
On February 6, we witnessed a V-shaped recovery from its multi-year falling trend line support area. In the process, the stock prices went on to form a ‘Bullish Hammer’ pattern around it.
The said pattern has been confirmed on a closing basis and hence, we expect a good relief move in this counter. One can look to go long around for a target of Rs 468 in the coming weeks. The stop loss can be placed at Rs 395.80.
The author is Chief Analyst- Technical & Derivatives, Angel Broking.
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