ONGC, Nestle among top stocks to buy, charts show strength; check Nifty’s support, resistance levels By Shrikant Chouhan Indian stock market closed at the lowest point of the day on Tuesday. The market is not stabilizing at any specific level, which is an indication of some more uncertainties in the near term. The Nifty/Sensex closed below the level of 14500/48300 that would keep open the possibilities of hitting 14400/14370 (48000/47900) levels, however, it is crucial for the market to close above the levels of 14450/48100 to maintain the upward bias. On the higher side, 14600/48500 and 14750/48900 would be the main obstacles. Today, although there was some profit-taking seen in the PSU stocks on Tuesday, we feel they can easily attract follow up buying in the next couple of sessions. On the monthly chart, it is observed that post its drop from the highs of 180 the stock went into a correction phase, however, the stock reversed after forming the strong base at its demand zone and started trading in an upward channel. Additionally current range breakout with incremental volume activity on the daily chart indicates the stock has good potential for further upside. Canara Bank BUY, CMP: Rs 141.35, TARGET: Rs 150, SL: Rs 136 For the last two months, the stock has been in a downward channel after hitting the double top chart pattern at around 172, and thereafter it found support at its previous lows and reversed sharply by forming a hammer candlestick pattern. Moreover the recent formation of the Cup and Handle chart pattern on the daily time frame with rising volumes indicates bullish movement in the near term is very likely to persist. Nestle India BUY, CMP: Rs 16,546.6, TARGET: Rs 17,400, SL: Rs 16,200 For the last few days the stock was trading in a lower top and lower bottom series chart formation and eventually the downward move took a pause at the rising trend line and it seems that the bulls got into action, further the technical oscillator stochastic indicates trend reversal as it is signaling the oversold condition of the counter. Cummins IndiaBUY, CMP: Rs 845.3, TARGET: Rs 890, SL: Rs 825 Strong reversal formation is evident from the multiple support area of 820, inverted hammer candlestick formation followed by star pattern on the weekly scale hints at bullish momentum in the counter incoming horizon. (Shrikant Chouhan is Executive Vice President (Equity Technical Research), Kotak Securities. Views expressed are the author’s own.)
However, he believes that the impact on the Indian market is going to be temporary since there could be some short-term impact on flows into Indian equity markets. But since the Indian economy is on a strong wicket and will continue to remain resilient.
“Improved fiscal situation, controlled current deficit, stable interest scenario combined with good corporate earnings should lead to limited impact on the Indian bond market and equity market too,” he added.
The midcap and smallcap indices took a bigger knock with the BSE MidCap fell 2.51%, while BSE SmallCap index dived 4.18%. According to Amnish Aggarwal, head, research, Prabhudas Lilladher, the valuations were already high and some correction was expected. “If the situation sustains as it is then further correction can’t be ruled out,” Aggarwal said.
Telecommunication and industrials indices were the top laggards with BSE Telecommunication declining 3.82%, followed by BSE Industrials falling 3.26%. JSW Steel (-2.99%), Tata Steel (-2.52%) and Tata Consultancy Services (-2.44%) were the top losers of Sensex.
Surprisingly, both foreign portfolio investors and domestic institutional investors were net buyers today. While, FPIs net bought shares worth Rs 252.25 crore, DIIs have purchased shares worth Rs 1,111.84 crore, as per provisional data from exchanges.
Calling this a “normal phenomena” Pankaj Pandey, head, research, ICICI Direct said, “I will not really give too much weight to a single day buying figure. Amid concerns of elevated interest rate and geopolitical tensions, in a typical market cycle, 8-10% correction is possible at any point in time.”
The brunt of geopolitical conflict, elevated interest rates and rising crude oil prices was also felt by other Asian- Pacific markets. Jakarta Composite Index lost 1.57% followed by Shanghai Composite Index and PSEi, which fell 1.47% and 0.89%, respectively. Nikkei and KOSPI declined 0.83% and 0.76%.