Kunal Bothra’s 2 trading picks for next week
There was just a feeble move on Friday and no big bang follow-through to what we did on Thursday. Is it giving you conviction about some more volatility, some more weakness coming week or do you think the worst perhaps is behind us?
There are no signs of volatility ebbing off because intraday, there are still those 100 point moves on Nifty and broadly it comes in the second half of the trading session which goes on to show that the market participants do not want to carry long positions — whether it is a long weekend or whether it is a closing towards the week or towards the day.
That is the only worrying part for the markets. On one hand, the global market volatilities are actually ebbing off and you are seeing a positive stability building up in many of these Asian markets. It is just a matter of time where before this sort of ebbing of volatility would happen for our markets as well.
I do not see the selling pressure continuing for our markets for a long period of time. If we test that 200-day moving average, you could see a lot of stability creeping into our markets as well. So maybe another 1-1.5 odd percent lower on the index and you could be looking at some contra buying or some round of short covering happening on the markets.
You track the Nifty Bank rather closely. Would you say there is merit in shorting come Monday morning or would you wait and see how the global sentiment is panning out? Also what about your call on ICICI Bank which has taken it on the chin this entire week?
Most of the private sector banks are showing renewed signs of weakness. Till the end of February where the first half of that selling pressure had been digested by the markets, these private sector banks — ICICI and Axis Bank — were still holding their ground. They had gone through their phase of correction but they were not losing out in terms of leading the market fall.
In the last couple of weeks, you are seeing some bit of renewed weakness in these private sector banks and that is clearly shown on the results for Bank Nifty as well. It is trading below the long-term averages quite convincingly. There was a feeble attempt towards breaking the average a week or two back, but that was like a failed attempt and you saw the index steeping up lower. The PSU bank index is the other dragging point and the index is down 20-25% from just about one-and-a-half odd month highs.
Both these pains are getting exaggerated for the markets and that would lead to more shorting opportunities for Bank Nifty as well.
Any stock strategies for Monday morning?
Now that I am expecting the volatility to subside, most of the stocks which are trending up higher on the back of some decent chart patterns should probably try and pick up momentum. The first one I am expecting is Tech Mahindra. The overall midcap IT pack has been trading with an extremely strong positive bias. Tech Mahindra is very close to breaking its fresh 52-week high and the stock should start a fresh uptrend. It is a buy at Rs 660 as a positional target with a stop loss at Rs 600.
And the second is a buy on Indiabulls Ventures. The last three days of the previous week there was very strong volume accumulation on Indiabulls Ventures. It is closer to breaking a downward sloping trend line breakout and that could happen over the next couple of days. So, that is also a buy from my side, with a target of Rs 280 and a stop loss at Rs 250.