We did see some recovery coming in trade on Tuesday, but in the last half an hour we just gave up on to that and we are still lower compared to what we were on Tuesday. Do you see any support at current levels to come in for the benchmark at least?
Rahul Sharma: Yes, so 23,200 is where we have our eyes fixated on. 23,200 is an important Fibonacci support of the entire bull move or bull market that we saw post the general election outcome. We came very close to that at opening today and post that we are seeing a bounce back and along with this there is a bullish divergence which is happening on the hourly charts and this is a triple bottom bullish divergence which is happening. So, we feel there is a strong case for a pullback, for a bounce back from these levels. Whether the bounce back translates into a reversal or not, only time will tell but we feel that 23,200, the risk reward is fairly favourable for fresh investments, for fresh entries and I think this is an area where one can look to add on to the names which are available at a bargain list.
So, we have actually created a list of stocks which can be bought in this week where we feel that risk reward are highly favourable and the bounce back could mean anywhere like in terms of stock performance the moves can be 5% to 10% whereas in terms of Nifty, the bounce back once it starts can easily be around 800-1000 points from where we are currently trading.
Any hurdle that you could see for the Nifty that is the benchmark and what are the stocks that you were just mentioning that you have suggested buy at the current levels?
Rahul Sharma: Yes, so in terms of the hurdle 23,800 is where the proper resistance for the Nifty is. Once that crosses, that should open gates for more. But as of now, let us speak of the immediate levels. So, 23,200 roundabout, plus-minus 100 points, look to add. Stocks which are looking good, so we have created a list of seven largecap stocks and seven midcaps and smallcap stocks.
So, to name the largecap ones, Indian Hotels remains our top pick, then is Vedanta, Infosys, Trent, Bajaj Finserv, ICICI Bank and State Bank of India. So, these are the stocks which we feel can do well from a bounce back perspective and on the smallcap and midcap space, we are liking Dixon Tech, we are liking Inox Wind, Himat Seide, Phillips Carbon Black, Suzlon, Angel One and V2 Retail to name the seven stocks on the smallcap space. So, these are the stocks where we feel risk reward is favourable, charts are indicating that a turnaround is around the corner and once the kind of bounce back I think we saw two days back, 300 points in one day, the bounce back can be very fierce. So, we are hoping that 23,200 is where we should see some bit of a recovery in the market.
The other group of stocks which are coming under pressure are of course, some of these financiers to the entire news flow reaction that we are seeing. So, PFC, REC, PNB, Canara Bank, SBI, these are all down in the trading session. What within some of these financials would you recommend buying on dips?
Rahul Sharma: We will go with SBI. In fact, it is there in our largecap list as well. Now, whatever the negative news is, probably it should be digested or priced in by the end of today’s session.
Around 775, the stock is trading at its 200-day EMA and PSUs have been relatively outperforming the entire market over the last few days.
So, relative strength was inherently there in this sector barring the last seven-eight trading sessions where everything came down along with the Nifty. So, we feel that at 775, it is a good bet and one can look to add on to on a day when there is bad news in the sector and we feel that the bounce back can take us back to around 850 odd in no amount of time.
As far as PFC, RECs are concerned, these stocks have also taken a beating today. We would rather wait for a couple of days and post that we will take a call on this one. But from this entire space, SBI is the one to go for. Once it starts moving, probably we can shift focus on to the other names in the sector.
But on the gaining side, you have Indian Hotels which has actually hit a record high in an otherwise weak market. And then Nalco is the other one which is doing quite okay. Just taking a look at the broader markets quickly, Amber Enterprises there features on the list. What is your take on some of these names?
Rahul Sharma: So, Nalco is a pretty solid one and we have it in our Diwali picks as well. The stock can do well, even from these levels one can look to buy. Although stock is up 4% today, but we feel it has got long legs. Our target is around 300 on the upside. So, one can look to buy at these levels and in case there is a smallish dip in the next few trading sessions, one can look to add. As long as it remains above the 225 mark, the bias remains positive in the same for a target of 300.
And speaking of Indian Hotels, we have been recommending this stock since last four-five trading sessions. The stock is doing extremely well. We feel that 900 is where the stock is headed for. Look to buy on dips if any and in case you are holding this stock in your portfolio it is best to stay put, especially in the negative market this stock has sort of defied gravity and gone on to hit new highs.