Buy these two stocks for near term gains as Nifty’s intermediate uptrend remains intact

May 06, 2021 8:43 AM

Traders will need to watch if the Nifty can now hold above the crucial supports of 14,506-14,461 in the very near term. Further upsides are likely once the immediate resistances of 14,723 are taken out.

Nifty, Stocks to buyNifty's intermediate uptrend remains intact. (Image: Reuters)

While the Nifty has corrected from the high of 15,044, the index continues to hold above a rising trend line that has held the important lows of the last few months. This implies that the index remains in an intermediate uptrend. With the strong bounce-back seen on Wednesday, traders will need to watch if the Nifty can now hold above the crucial supports of 14,506-14,461 in the very near term. Further upsides are likely once the immediate resistances of 14,723 are taken out.

Stock picks

Buy Torrent Pharmaceuticals

After correcting from a high of Rs 3031 touched in August 2020, Torrent Pharma found support around the Rs 2311 levels in March 2021. These levels also roughly coincide with the previous swing lows of the stock tested in July 2020, implying that the Rs 2311 levels is a strong support area.

On Wednesday, the stock moved up smartly and in the process took out its recent highs on the back of above-average volumes. This augurs well for the uptrend to continue.

Technical indicators too are giving positive signals as the stock trades above the 50 day SMA and short term momentum indicators like the 14-day RSI too have bounced back from lower levels and are now in rising mode and not overbought.

With the intermediate and long term technical setups looking positive, we believe the stock has the potential to move higher in the coming weeks and therefore recommend a buy between the Rs 2600-2640 levels. CMP is Rs 2627.35. Stop-loss is at Rs 2500 while targets are at Rs 2890.

Buy Shipping Corporation of India

SCI has recently corrected from a high of Rs 134.65 tested in early March 2021. The stock found support at the Rs 97 levels before bouncing back in the last two weeks and consolidating in a range.

On Wednesday, the stock broke out of a narrow range on the back of above-average volumes. This augurs well for the uptrend to continue.

Technical indicators are giving positive signals as the stock trades above the 20-day SMA. Short term momentum readings like the 14-day RSI too are in rising mode and not overbought.

With the short term and intermediate technical setups looking attractive, we expect the stock to gradually move higher in the coming weeks. We, therefore, recommend a Buy between the Rs 114-118 levels. CMP is Rs 116.8. Stop-loss is at Rs 108 while targets are at Rs 138.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)

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