1) Nifty ended over 1% lower in the week with heavyweight HDFC Bank leading the downside. The next week will be all about Budget and earnings. How are you placing your positions ahead of the Budget?
Last three days have seen rejection trades, with bears systematically upping their ante with every attempt to rise. However, dips never gained speed, and the prime reason for the same is the presence of the 50day SMA nearby, which has successfully allowed a regroup of bulls on Thursday. However we have managed just 50% retracement of recent falls and there is not much to rejoice in terms of bullish confirmation. Yet, we hope to build on Thursday’s momentum, and look for 21500-560 initially, stop and reverse for 20900. We would consider out and out bullish bias only on a close beyond 21800.
2) The fate of Nifty Bank seems directly tied to HDFC Bank. Do you see more pain ahead in both?
Nifty Bank staged a solid recovery on Thursday, but as is the case with Nifty, it has not excited us. We prefer to go in next with a limited upside objective, but are willing to broaden the horizons, should we push above 45420. Downside marker, until then, may be placed near 44700.
3) How would you trade rail stocks in the run up to the Budget session? Which ones can surprise?
Railway stocks have run up significantly with most of them moving more than 4 times since last budget. If we look at history, in the three months post budget since 2019, 3 out of 5 times railway stocks have gained an average 15%. However, this time around the pre-budget rally in railway stocks has been the biggest in the last 10 years and to enter them afresh would be to go in with eyes closed, with a very real present danger of reversal, though recent patterns have not really painted a bleak picture. Atleast not yet. That said, RVNL and Texrail could surprise.
4) Amid all the drama over the merger with Sony, shares of Zee have fallen 44% in January so far. Is it best not to catch a falling knife or do you think the stock has bottomed out?
Having fallen to the lowest since the 2020’s panic, the stock indeed appears to be in a falling knife situation on the face of it. However, two days of calm following the break down amply suggests that bears do not have any more fuel to run this stock further down. This may encourage aggressive traders to look for a 50% retracement move higher to 185, to start with, but there is no reason not to have a downside marker. We would prefer to have them either at 156 or 145.
4) Give us your top ideas for Budget day.
FACT (CMP: 886)
View : Buy
Targets : 925 – 960
Stoploss : 845
The stock has been moving within a narrow range since December 2023. A break of the narrow resistance has happened in daily and weekly time frame pointing towards more upsides. Also, the MACD has broken above the signal line supporting our expectation of continuation of upside. We expect the stock to move towards 925 and 960 in next few weeks. All longs may be protected with stoploss placed below 845.
BORORENEW (CMP: 623)
View : Buy on pullback towards 595 – 605
Targets : 680 – 740
Stoploss : 577
After making an all-time high in April 2022, the stock has been in a profit booking mode since then. This week, it has broken above the declining trendline resistance of 500 which is painting a rosy picture for the stock. In the monthly time frame, the MACD is about to cross the signal line and a Marubozu candle is formed which is also adding color to the prospects of the stock. We expect the stock to move towards 680 and 740 in the next few weeks. All longs may be protected with stoploss placed below 577. Since the weekly momentum indicators are slightly stretched, it is best advised to enter on pull backs.
First published in Economic Times