Go for buying selective stocks

Mumbai: On Friday, markets followed the trend of world equity markets, which closed with a massive drop in the last few days. They were down due to weak economy-related data as well as disappointing quarterly numbers. However, our markets held up relatively better than world markets, which fell by over 1.50 per cent. Weekly, Sensex was down by 300 points.

Realty, Auto, and IT fell by over 2 per cent weekly, while the Nifty Pharma index was up nominally. Amol Athawale, VP-Technical Research, Kotak securities, said: “We saw particular buying interest in new-age companies after Zomato’s Q1 numbers. Technically, the market managed to climb to new highs during the week.”

Sensex achieved major milestones by crossing 82,000 on the Sensex. However, currently, most stocks and indices are close to important resistance levels, and we may see consolidation for a few days or weeks. This happens whenever the indices move too far away from the short-term averages.

On an immediate basis, the market is finding support between 80.900 and 80,600 levels. On the other hand, until the market crosses 82,200, we may see a range-bound movement in the market.

The strategy should be to buy selective stocks between 80,900 and 80,600 levels. A close below 80,600 may take the market towards 79,900 or 79,500 levels. Any bounce towards 81,700-82,000 levels will be an opportunity to reduce long positions.

“As global equity indices tumbled, investors in domestic markets too felt the heat and resorted to profit taking. The recent upsurge had made Indian stocks very expensive and hence correction was due for some time. Despite the slump, our resilient economy and strong fundamentals along with healthy corporate earnings would keep the downside limit,” says Prashanth Tapse, Senior VP (Research), Mehta Equities.

STOCK PICKS

Bharat Forge | Buy | CMP: 1,650 | SL: 1,620 | TARGET: 1,775 and 1,800

The stock is trading above its anchor VWAP support level at the 1,650-1,660 mark, indicating a low-risk buying opportunity. There has been a noticeable spike in trading volumes, and the RSI (14) is at 52, showing potential momentum pickup. We anticipate targets of 1,775 and 1,800, with a stop-loss set at 1,620 to manage risk effectively.

Dixon Tech | Buy | CMP: 11,650 | SL: 11,400 | TARGET: 12,400 and 12,500

The stock is maintaining its position above the anchor VWAP support level at 11,600, offering a low-risk buying opportunity. There has been a significant increase in trading volumes, and the RSI (14) is at 51, indicating potential momentum pickup. We expect targets of 12,400 and 12,500, with a stop-loss set at 11,400 to manage risk effectively.

(Source_Riyank Arora Technical Analyst at Mehta Equities)