Buy or sell: Ruchit Jain recommends these two stocks to buy next week
Following a full day of trading on Saturday, the equities market will be closed on Monday due to a public holiday in Maharashtra and the national government’s half-working day in honour of the opening of the Ram Temple in the northern city of Ayodhya.
The S&P BSE Sensex fell 0.4% or 259.58 points to 71,423.65, while the Nifty 50 closed 0.23% or 50.60 points lower to 21,571.80.
Analysts claim that the benchmark Nifty 50 had a lacklustre session. Digging deeper, Nifty 50 gave up gains in the fag-end of Saturday’s regular trading session.
“Nifty ended lower in Saturday’s trade, but the positive takeaway was that there was ‘lack of bearish conviction’. Perhaps that was on backdrop of Wall Street climbing in Friday’s trade, with the S&P 500 and the Dow Jones Industrial Average marking new record closes,” said Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities.
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Stock Market Last Week
In the week gone by, Nifty 50 registered a new all-time high of 22,124 in Tuesday’s session, but it then witnessed a sharp correction where the index sneaked below 21,300 in just a couple of days. The index recovered marginally towards the end of the week, and it ended above 21,600 with a weekly loss of over a percent, said Ruchit Jain, Lead Research Analyst at 5paisa.
Nifty 50 registered a new all-time high at the start of last week as the positive reaction on the IT heavyweights post their quarterly numbers led to a continuation of the uptrend. However, the lower than anticipated results from the banking giant HDFC Bank led to a sharp sell-off in the counter, and this impacted the benchmark indices, which corrected sharply in just a couple of sessions.
Share Market Tips For Next Week
Now in this correction, foreign institutional investors (FIIs) have turned cautious on the markets, as they sold heavily in the cash segment and in the index futures segment too. They trimmed their long positions and formed short positions, explained Jain.
Their ‘Long Short Ratio’ declined from 64 percent when the index was at high to sub 50 percent, which means they have net short positions in the segment. Also, technically, the Nifty 50 index broke its important support of 21,450, which led to the formation of a ‘lower low’ on the daily chart.
Thus, the data has turned bearish and hence theres a high probability of index facing resistance at higher levels in the coming week, according to Ruchit.
“The 50 percent retracement of this correction is around 21,700, and the 61.8 percent retracement is at 21,800, which will be seen as the crucial hurdles. On the flipside, 21,500 will be seen as immediate support in the coming week, as the put option of this strike has the highest open interest outstanding in the derivatives segment. A move below this support could lead to a down move up to the 21,200–21,250 range where the 40 DEMA is placed,” highlighted Jain.
Talking about the broader market, Jain said that in the last week, we have not seen a broader market sell-off as the midcaps have outperformed. The public sector undertakings (PSU) stocks, too, were buzzing and continued to outperform in spite of volatility in the benchmark indices.
“Although there are no signs of reversal yet, it is advisable to avoid chasing these stocks at their current levels and wait for either a time- or price-wise corrective phase. Booking a partial profit and taking some money off the table could also be a good strategy at this juncture,” advised Ruchit.
Stocks To Buy Next Week – Ruchit Jain
On stocks to buy next week, Ruchit Jain recommended two stocks – Multi Commodity Exchange Of India Ltd (MCX) and FDC Ltd.
Here we list out full details in regard to Ruchit Jain’s stock recommendations:
MCX
According to Jain, post the recent sharp run-up, the stock has been consolidating in a range since last few weeks. The RSI readings, which were overbought earlier, have cooled from the highs and have now given a positive crossover from its support. The prices are also trading above its 40 DEMA support, which indicated that the medium trend remains positive.
Hence, short-term traders can look to buy MCX in the range of ₹3,200–3,150 for potential targets around 3,400 and ₹3,550. The stop loss on long positions should be placed below ₹3,000.
FDC
Ruchit stated that the stock has been forming a ‘Higher Top Higher Bottom’ formation since the last few weeks, and prices gave a breakout above its previous swing high resistance in the week gone by. The volumes along the breakout were high, and the RSI oscillator, too, is hinting at a continuation of the positive momentum.
Hence, traders are advised to buy the stock in the range of ₹442-438 for potential near-term targets around ₹468 and ₹490. The stop loss for long positions should be placed below ₹415.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 21 Jan 2024, 07:47 AM IST
