The market has not shown any sign of strong rebound yet, as the recent recovery also failed and the benchmark Nifty closed at an eight-month low for the week ended March 24. Nervousness in global markets after the recent banking crisis and hike in securities transaction tax (STT) by the government weighed on market sentiment.
The Nifty50 fell nearly 1 percent during the week, to close at 16,945, the lowest level since week ended July 22 last year. The index has formed bearish candlestick pattern with long upper and lower shadows on the weekly timeframe, indicating volatility in the market. Also there has been lower top lower bottom formation for second consecutive week.
The index has strong resistance at around 17,200-17,250 area which acted as strong support before current major correction, as crossing the same can take the Nifty50 to 17,450-17,500 levels, whereas the crucial support remains at 16,800, experts said.
"The market is currently oversold, but such financial issues can be very disruptive at times. Hence, traders should ideally avoid aggressive bets for a while," Sameet Chavan, Chief Analyst-Technical and Derivatives at Angel One said.
From a technical point of view, he said, "we are not too far from the sacrosanct support zone of 16,850 - 16,800, which coincides with the September month swing low and 89-weekly EMA."
On the higher side, 17,200-17,250 has been acting as a sturdy wall and the bulls desperately need a convincing breakout beyond this to make a comeback, he added.
Amol Athawale, Technical Analyst (DVP) at Kotak Securities also feels a reversal formation on daily charts and bearish candle on weekly charts is indicating further weakness from the current levels.
The volatility is likely to be on the higher side and the apt strategy would be to keep a close eye on global developments and take one step at a time.
In case of relief, Sameet believes traders can find ample opportunities in the beaten spaces and for investors, this decline would provide opportunity to accumulate quality stocks in a staggered manner.
Let's take a look at the top 10 trading ideas by experts for the next three-four weeks. Returns are based on the March 24 closing prices:
Expert: Jigar S Patel, Senior Manager - Equity Research at Anand Rathi
HDFC Life Insurance Company: Buy | LTP: Rs 492 | Stop-Loss: Rs 475 | Target: Rs 535 | Return: 9 percent
On January 6th, 2023, it registered a top of Rs 620. Since then, it has been making the lower top and lower bottom structures which resulted in a 26 percent cut in price. During February 2023, it made a nice base near Rs 460-470 levels.
On the indicator front, the daily RSI (relative strength index) has displayed a bullish regular divergence along with MACD (moving average convergence divergence) bullish crossover further confirming our bullish view on the counter.
One can buy in a small tranche in the range of Rs 490-495 and another around Rs 480-485 for an upside target of Rs 535 and a stop-loss of Rs 475 on a daily close basis.
Cipla: Buy | LTP: Rs 877 | Stop-Loss: Rs 840 | Target: Rs 950 | Return: 8 percent
Since last 6 months, the said counter has seen massive beating resulting in a 28 percent cut in price. Looks like the fall is arrested around Rs 860-870 levels.
On a daily scale, Cipla has made the Bullish Alternate Bat pattern which is one of the most powerful patterns in the Harmonic arsenal. The potential reversal zone comes around Rs 860-870, which is complemented by pair of Hammer structures thus making it lucrative at current levels.
One can buy in the range of Rs 870-880 with an upside target of Rs 950, with stop-loss Rs 840 on a daily close basis.
Great Eastern Shipping Company: Buy | LTP: Rs 624 | Stop-Loss: Rs 585 | Target: Rs 680 | Return: 9 percent
On December 21, 2022, it registered a top of Rs 749. Since then, it has been making the lower top and lower bottom structures which resulted in a 29 percent cut in price. During February 2023, it made a nice base near Rs 560-580 levels.
On a daily scale, a Bullish Engulfing candlestick pattern was seen near mentioned support zone of Rs 580 levels thus confirming a bullish stance for coming sessions.
In previous sessions, there was huge buying interest seen along with massive volume which is a sign of further upside in the counter. On the indicator front, the daily RSI (relative strength index) has displayed a bullish regular divergence along with MACD (moving average convergence divergence) bullish crossover further confirming our bullish view on the counter.
One can buy in a small tranche in the range of Rs 620-630 and another around Rs 605-610 for an upside target of Rs 680 and stop-loss of Rs 585 on a daily close basis.
Expert: Viraj Vyas, Technical & Derivatives Analyst| Institutional Equity at Ashika Stock Broking
AIA Engineering: Buy | LTP: Rs 2,843 | Stop-Loss: Rs 2,700 | Target: Rs 3,150 | Return: 11 percent
The stock is trading around all-time high levels in a choppy market which denotes relative strength versus Index. It was consolidating above the 21-EMA and the last 2 days have witnessed above average volumes.
It has also formed a Cup and Handle (bullish pattern) and continuing to sustain above Rs 2,780 augurs well for bullish momentum. The RSI indicator too suggests a breakout from the downward sloping line which has bullish implications.
Ramco Cements: Buy | LTP: Rs 744 | Stop-Loss: Rs 705 | Target: Rs 825 | Return: 11 percent
The stock has been consolidating time and price wise since October 2022 and in the base formation, the stock has painted a Double Bottom pattern on the daily chart.
The stock is consolidating in a tight range (Rs 740-700) near the pattern neckline with the last 2 days witnessing above average volumes. The RSI indicator too suggests a breakout from the downward sloping line which has bullish implications.
JSW Steel: Sell | LTP: Rs 658 | Stop-Loss: Rs 690 | Target: Rs 590 | Return: 10 percent
The stock has been forming lower highs and lower lows January 2023. In the last few trading sessions, the stock has violate the lower level of the channel which resembles a Bearish Flag and Pole pattern.
The recent price action has seen formation of Marubozu candlestick coupled with strong volumes which does indicate further weakness to follow if the stock continues to sustain below the 680-mark.
Expert: Shrikant Chouhan, Head of Equities Research (Retail) at Kotak Securities
Hero MotoCorp: Sell | LTP: Rs 2,313 | Stop-Loss: Rs 2,350 | Target: Rs 2,150 | Return: 7 percent
The stock is continuously making series of lower highs and lower bottoms. On Friday, it closed at the lowest point of the week at Rs 2,310. Below the Rs 2,300 level, there could be a quick decline towards Rs 2,250 or Rs 2,150.
The key oscillator RSI is also comfortably placed below the 30 mark, indicating a bearish hold. Based on this the strategy should be to sell below Rs 2,300 level and place a stop-loss at Rs 2,350.
HDFC Life Insurance Company: Buy | LTP: Rs 492 | Stop-Loss: Rs 475 | Target: Rs 540
The stock is diverging positively on the daily chart. Major oscillators such as RSI and MACD are supporting the validation of the formation.
The stock is set to move higher towards Rs 530-540 in the near term. The 20-day SMA has support at Rs 480 which should be an ideal level to add more. One can keep stop-loss at Rs 475 and hold for a target of Rs 540.
Dalmia Bharat: Buy | LTP: Rs 1,831 | Stop-Loss: Rs 1,700 | Target: Rs 1,950 | Return: 6.5 percent
On a weekly and monthly basis, the stock is forming a rectangle consolidation between Rs 1,650 and Rs 1,950 levels. In these types of cases, if the stock manages to close above the median level, which is at Rs 1,800, then we can expect an upward move towards the upper limit of the trading range.
Additionally, the cement sector has been performing well over the past few days and weeks, which will help the stock rally in the short term.
As the market sentiment is bearish, our strategy should be to buy in parts. Buy at the current level and add more at Rs 1,750. For this, one can keep a stop-loss at Rs 1,700. On the higher side, the stock may rally towards Rs 1,900 or Rs 1,950 in the near term.
Expert: Ruchit Jain, Lead Research at 5paisa.com
Crompton Greaves Consumer Electricals: Buy | LTP: Rs 294 | Stop-Loss: Rs 277 | Target: Rs 317 | Return: 8 percent
The stock has seen a price wise corrective phase in last few weeks. But the prices are now trading around its crucial support zone. Around its support, the RSI oscillator has given a positive divergence as a lower low in price is not confirmed by the oscillator. Hence, expect a pullback move in the stock in the short term.
Traders can buy the stock in the range of Rs 292-290 for potential short term targets of Rs 305 and Rs 317. The stop-loss on long positions should be placed below Rs 277.
RBL Bank: Sell | LTP: Rs 135 | Stop-Loss: Rs 144 | Target: Rs 124 | Return: 8 percent
The stock has been forming a ‘Lower Top Lower Bottom’ structure and has recently given a breakdown from a ‘Symmetrical Triangle’ pattern. The momentum readings are pointing at a continuation of the downtrend and hence, we expect further correction in the near term.
Traders are advised to sell the stock in the range of Rs 137-139 for potential near term targets of Rs 130 and Rs 124. The stop-loss for short positions should be placed above Rs 144.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.