Podcast | Stock Pick of the Day: 'Trade with positive bias, Nifty support at 10,994–10,840'

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Sameet Chavan

After an extended weekend, our markets opened flat despite SGX Nifty suggesting a gap down opening on March 5. During the initial trade, Nifty dipped a bit, but after that, we witnessed an upward momentum during the week.

Though the last couple of days did not see much price action, we need to appreciate the fact that despite all Asian bourses falling on the last day, the Nifty managed to close above 11,000.

For the last few days, the index was consolidating and mid and smallcaps started attracting traders’ attention. However, the first trading day of the week turned out to be the trend deciding day for our benchmark indices.

Due to the positivity, Nifty has confirmed a breakout from the falling trend line on the daily chart. Thus, muted action in the last two days should be construed as a pullback or a breather.

Further, if we observe the daily chart meticulously, we can see the formation of ‘Megaphone’ pattern. With supports of 10,583 and 10,585 being the base of the same, the higher trend line is extended towards 11,300–11,350.

Hence, a move towards this important junction cannot be ruled out in days to come. Traders are advised to trade with a positive bias and expect 10,994–10,840 to act as a strong support zone for now.

As far as individual sectors are concerned, barring IT and FMCG, all other sectors contributed in this rally and look poised for extended moves; thereby providing credence to the up move.

If we have to highlight a few sectors then it’s no brainer, banking certainly looks encouraging. Within this, Midcap private banking remains to be our preferred space along with selective PSU banking counters.

Also, the Midcap index, which has been oscillating within the boundaries of a ‘Triangle’ pattern since September, has finally confirmed its breakout and is set to continue the upward trajectory.

Here are two stocks that could give 9-16 percent return in the next 14-21 sessions:

Petronet LNG: Buy| LTP: Rs 233.90| Target: Rs 255| Stop loss: Rs 223| Upside: 9 percent

In the last few months, the stock has consolidated in a range. On the long-term charts, this consolidation just seems to be a time wise correction within an uptrend.

During the week gone by, the prices have given a breakout from a falling trend line resistance. The RSI oscillator too is positively placed and hence, we expect the stock to resume its uptrend.

Thus, we recommend buying this stock at current levels for a target of Rs 255 over the next 14 – 21 sessions. The stop loss should be fixed at Rs.223.

ITD Cementation: Buy| LTP: Rs 122.70| Target: Rs 142| Stop loss: Rs 112| Upside: 16 percent

Along with the broader markets, this stock has corrected sharply since the month of January 2018. However, the stock now seems to have formed a support base around Rs 100 that coincides with its long-term support.

On March 8, we witnessed a price up move with increasing volumes and with broader markets showing signs of recovery; we expect this stock to move higher in the near term.

Thus, we recommend buying this stock at current levels for a target of Rs 142 over the next 14-21 sessions. The stop loss should be fixed at Rs 112.

The author is Chief Analyst- Technical & Derivatives, Angel Broking.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.