Our view on markets continues to remain bullish. After hitting a recent high close to 8300, markets did witness some volatility leading to a correction, this can be mainly attributed to external factors like the Brexit issue, but we consider this as an opportunity to buy and average out the portfolio stocks. The underlying market sentiment is still bullish and this is evident considering the outstanding open interest for the 8500 call option is one of the highest. We do expect the markets to scale back to 8300 over the next 2 weeks of. Given this, we would advise traders to avoid initiating short trades. In fact one can look at buying the 8200 call options at Rs 115/- and holding it to expiry.
3 Short-term stock picks
South Indian Bank Limited
The stock price of The South Indian bank limited has been under tremendous pressure since a year and half, and it continues to be trade near its 52 week low of 16.35. But there has been some amount of bottom fishing at these levels, leading us to believe that the stock may have bottomed out at 17-18. Further, given the price action in the stock over the last few trading sessions, we do get a sense that the stock could break above 20 anytime soon. One should look at buying the stock at current levels keeping 17.5 as a stoploss.
The Company is cleaning up their international operations and has also posted impressive results in the recent quarter. The stock price has reacted positively to these developments and has rallied from the recent lows of close to 130. In the backdrop of this positive sentiment, we expect the stock price to hit 200 over next few trading sessions.
VA Tech Wabag
The stock has smartly recovered from its recent lows of 435 (posted during March 2016) and has now crossed 600. We expect this momentum to continue over the next few trading sessions. Every retracement in the stock should be considered as a buying opportunity, and traders should place 585 as a stoploss for long trades in the stock.
The author is VP- Education Services, Zerodha