By Shrikant Chouhan
As expected, the range-bound movement was seen in the benchmark indices on Monday. The Nifty closed down 47 points while the Sensex closed down 184 points. Across sectors, buying was seen in pharma, PSU banks and mid-cap IT stocks, while intraday profit booking was seen in infra and FMCG stocks. Technically, after the gap-up opening, the market saw profit booking at higher levels which were at 17,766/60,113. We are of the view that 17,800/60,200 will now act as an important resistance area for the traders. Above that, the market can go up to 17,870-18,000/58,500-58,700.
On the downside, selling pressure may increase below 17,600/59,550. Below this, the index may test 17,500-17400/59,300-59,000 levels again. The strategy should be to buy between 17,500 and 17,450. For this, keep a stop loss at 17,400/59,000. For the bank nifty 42,400 and 42,500 would be a resistance zone and support exists at 41,800.
Stocks to buy
Bata India
BUY | CMP: Rs 1429.1 | TARGET: Rs 1500 | SL: Rs 1400
The stock had underperformed in the past many weeks and it has witnessed a downtrend. After the sharp correction from higher levels, the stock is currently trading in a range bound mode, which indicates accumulation at these levels. Therefore, upward movement from the current level is expected to resume in the coming sessions.
Jindal Steel
BUY | CMP: Rs 567 | TARGET: Rs 595 | SL: Rs 555
The stock has given a breakout of the triangle chart formation, which clearly suggests bullish momentum to remain in the short term. Additionally, the closing above its short term moving average is indicating bullish strength from the current levels.
L&T
BUY | CMP: Rs 2,222 | TARGET: Rs 2,330 | SL: Rs 2,170
After hitting the recent highs of around 2330, the stock dropped on the lower side. However, it has found support near the important retracement zone. As a result, the pullback rally is very likely for further up move in the near term.
Canara Bank
BUY | CMP: Rs 299.1 | TARGET: Rs 315 | SL: Rs 292
On the daily chart, post reversal from its multiple support zone the stock is into a gradual up move and is into a rising channel pattern. The texture of the chart pattern suggests upward movement from the current level is very likely to continue in the coming horizon.
(Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Views expressed are author’s own. Please consult your financial advisor before investing.)
