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Nifty must hold above 18018 to head towards 18250; buy these two stocks to pocket near-term gains

Nifty technically has formed a Bearish candle on daily scale and negated its higher lows formation of the last five sessions. It formed a Doji candle on weekly frame and a hold of 18018 is crucial for a decisive move in this week

Nifty must hold above 18018 to head towards 18250; buy these two stocks to pocket near-term gains
Nifty to hold above 18018 zones for an up move towards 18181 and 18250 zones

By Rahul Shah

Equity markets index ended on a marginally positive against the previous week’s close led by IT, capital goods and metal stocks. Benchmark Sensex held above 60,600 and Nifty 50 managed to float over the psychological mark of 18,000, gained half percent against the previous week’s close. Pull back in FIIs buying interest and impressive quarterly results lifted market despite volatility in the global market. Sensex gained 361 points or 0.6% to close at 60622 and Nifty advance 71 points to close at 18028. Tech stocks recorded smart gains due to most of the major tech players like Infosys, HCL Tech, TCS and Wipro announcing strong Q3 numbers. Metal stocks posted solid gains this week due to 6-month high copper and aluminium prices. Moreover, Zinc inventory fell to 34-year low. Select defence stocks gained on hope of large orders. Capital goods stocks posted smart gained due to strong order book and expectation of higher budget allocation in the coming budget.

China market will be shut this week due to Lunar holiday. In the domestic front, quarterly results and January series F&O series expiry will be important for next week. Expects range-bound market as traders will focus on two important events in the next couple of weeks- Union Budget and US Fed interest rate decision which will schedule on 1st Feb. On the other hand, there will short spun next week as Thursday will be closed due to holiday for Republic day. If we compare, Indian market has not yet participated in the rally in Asian markets in the last one month. Domestic market declined by half percent Year to date (YTD) but China and Hong Kong Index climbed up by 8% each after China announced re-opening and travel restrictions. FIIs were net sellers of nearly 20000cr this month and Rs15000cr in the previous month (December 2022) or over $8bn in the two months.

Market expectation is that the FIIs pulled out from India to other cheap value emerging markets like China, Hong Kong.  However, India is the fastest-growing economy in the world due to strong GDP growth and better macros compare to other emerging markets. It will be a good entry point for the investors to buy in Indian equity at lower price. Improved Q3 results by banks, IT, hope of favorable union budget and 13-month low domestic inflation will be positive for the market sentiment. Expect momentum on Budget related stocks in the next two weeks like Infra, cement, slower energy, utility, micro finance and pipes sectors. 

Across the globe, markets were highly volatile this week due to mixed bag of US economy data. US reported disappointing retail sales data indicated potential recessions while weekly jobless-claims fell to 4-month low implying economy is improving.  Sentiment dampened in global markets after the US Fed official’s hawkish commentary that the US will hike interest rate till inflation cool down to 2% levels. However, Nasdaq Index gained this week after better-than-expected quarterly results and strong subscriber data as reported by Netflix. Google announced plans to slash its workforce to cut costs which lifted US Nasdaq Composite by 1% this week.

Moreover, there was rally in the US market due to mass expiration of options series as 180 million equity options roll over on Friday, the most for a January expiration in a decade. Asian markets led by China and Hong Kong after China announced re-opening. Nifty technically has formed a Bearish candle on daily scale and negated its higher lows formation of the last five sessions. It formed a Doji candle on weekly frame and a hold of 18018 is crucial for a decisive move in this week. Now, it has to hold above 18018 zones for an up move towards 18181 and 18250 zones whereas supports are placed at 17950 and 17850 zones.

Stocks to buy

Vedanta
CMP: Rs 330 | SL: Rs 322 | Target: Rs 345

Vedanta has given a breakout of the consolidation zone and it has formed a strong bullish candle on the daily scale which indicates buying interest in the counter. There is strong momentum seen across the metals space which will support higher prices in the stock. RSI on the daily and weekly scale is in the bullish zone which will take the prices higher. Considering the current chart structure, we advise traders to buy the stock for an up move towards 345 with stop loss of 322.

IndiGo
CMP: Rs 2,099 | SL: Rs 2,070 | Target: Rs 2,200

Indigo has retested the breakout of the cup and handle pattern on the daily scale and it has formed a bullish candle which has positive implications. RSI on the daily and weekly scale is in the bullish zone which will take the prices higher. Considering the current chart structure, we advise traders to buy the stock for an up move towards 2200 with stop loss of 2070.

(Rahul Shah is the Senior Vice President, Group Advisory Leader-PCG, Broking & Distribution at Motilal Oswal Financial Services. The views expressed are author’s own.)

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First published on: 23-01-2023 at 10:59:33 am