Invest in strong cos with a medium-term view
Financial stocks were draggers for the market on the back of a sudden rise in 10-yr bond yield across the world
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Mumbai: The market fell more than two per cent, which is significant and highest fall in the last five days. Nearly 3 stocks were negative as compared to 1 stock on the positive side. Financial stocks were draggers for the market on the back of a sudden rise in the 10-year bond yield across the world.
India's 10-year GSec was at 5.71 from there all the way now it has started trading at 6.20, however, in the US it was at 00.31 in the month March 2020 and now it is quoting at 1.38. The rise in bond yields controls liquidity and money starts flowing back to developed markets from emerging markets. Sensex has broken crucial support of 20 days SMA, which was at 50,150 and also the retracement support, which was at 50,100 levels. India's Volatility index has also jumped to 25.82, which is a 16.04 per cent rise in a single day. It is negative for the market as it signals further weakness in the market.
The next level to watch out for would be 49,340, which is a 50 per cent retracement of the previous up-move started from the lowest levels of 46,160. As the market is approaching the monthly expiry of the current month, the market could bounce back from 49,340 levels. "The short term and medium-term strategy should be to buy on dips. On the higher side, 50,400 and 50,600 would be immediate hurdles. Our advice is to invest in strong companies between 49,400 and 49,500 levels with a medium-term view," says Shrikant Chouhan, EVP, equity technical research at Kotak Securities.
Stock Picks
- APOLLOHOSP: BUY, CMP 2929.55, TARGET 3080, SL 2870 The stock has taken support near 50 day SMA and formed a spinning top candlestick pattern on daily chart.
- HDFC: BUY, CMP 2651.95, TARGET 2780, SL 2600 Reversal formation from important retracement zone is evident with incremental volume activity on daily chart.
- TATAMOTORS: BUY, CMP 304.5, TARGET 320, SL 297 The stock had been a consistent outperformer and recent activity near previous low indicates up move to resume in near term.
- TCS: BUY, CMP 2958.45, TARGET 3100, SL 2900 Post correction from the highs of 3339 stock has almost retraced 50 per cent of its previous up move, we expect reversal from current levels.
- AXISBANK: BUY, CMP 719.45, TARGET 755, SL 705 On intraday chart stock is indicating strong reversal from its important support zone with decent volume activity.
(Source-Kotak Securities)
