The market settled almost flat in the holiday-shortened week that ended March 22, taking a breather after the recent surge. Participants took note of the narrowing trade deficit figure and continuous inflow of foreign funds, which aided index to inch higher in the initial trades.
However, profit taking in the last two sessions trimmed gains. A mixed trend was witnessed on sectoral front wherein banking, IT and realty showed resilience while auto and media stocks ended lower.
We may see volatile swings across the board, owing to upcoming derivatives expiry. In absence of any major event on the local front, participants will be keeping a close watch on the on-going trade talks between the US and China and developments on the Brexit front.
Traders should use intermediate corrective or consolidation phase to accumulate quality stocks. Private banking, energy and select infra counters should be preferred for long trades while underperformance may continue in auto, media and metal pack.
The Nifty should sustain above 11,525 for the fresh up move while 11,350-11,250 zone would act as a cushion in case of further decline.
Here is a list of top three stocks which could give 6-7% return in the next 1 month:
Aurobindo Pharma Limited: Buy| Target: Rs 830| Stop-Loss: Rs 740| Upside 7.1%
Among the pharma counters, Aurobindo Pharma has been consistently maintaining long-term uptrend since 2009. It is currently hovering in a range around its record high and looks all set for a fresh up move.
The existence of support zone of multiple moving averages with favorable positioning of the indicators is adding to the positivity.
We advise traders to initiate fresh long positions in the given range Rs 770-775. It closed at Rs 775.85 on March 25, 2019.
V-Guard Industries Limited: Buy| Target: Rs 228| Stop-Loss: Rs 204| Upside 7%
V-Guard has been consolidating in a broader range for the last year and is currently trading in the middle of the band.
The chart pattern combined with the existence of major support of multiple moving averages is indicating the possibility of minor consolidation, followed by a strong surge ahead.
We advise using this phase to accumulate within the Rs 208-213 range. It closed at Rs 213.60 on March 25, 2019.
State Bank of India: Sell Apr Futures| Target: Rs 280| Stop-Loss: Rs 308| Downside 6%
In line with other PSU counters, SBI has also witnessed a decent rebound in the last one month. However, it failed to breach the resistance zone around 305 which resulted in the formation of a fresh shorting pivot.
We advise initiating shorts in the given range of Rs 298-302. It closed at Rs 295.90 on March 25, 2019.
(The author is President – Retail Distribution, Religare Broking Ltd.)