Hot Stocks | Bet on Samvardhana Motherson, sell Jubilant Foodworks for short term (2024)

The levels to monitor in the Budget week are around the psychological mark of 21,000, coinciding with 50-SMA. In the case of any negative surprises, Nifty may decline towards 20,800 or even towards the bullish gap of 20,500.

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The Nifty 50 slipped on the monthly expiry dayon January 25 at the end of a volatile session, concluding the week with a percent cut, just above 21,350.

For the second consecutive week, the Nifty experienced a decline, with bears seemingly in control, selling into any minor bounce. The charts exhibit a distorted pattern with a 'lower top lower bottom' formation on the daily chart, signaling a bearish reversal.

When examined on a broader scale, a 'head and shoulders' pattern confirms a bearish trend. This does not bode well for the bulls, suggesting potential challenges in the short term. The current week is crucial, aligned with the key Budget event, which typically sets the market direction. The Budget week is known for volatility, and considering the above formation we lean towards the bearish side.

In this scenario, the levels to monitor are around the psychological 21,000 mark, coinciding with 50-SMA (simple moving average). In the case of any negative surprises, the Nifty may decline towards 20,800 or even towards the bullish gap of 20,500.

On the flip side, the resistance is anticipated, with 21,500 and the week's high of 21,750 seen as formidable obstacles before the Nifty targets the recent landmark high of around 22,100.

The volatility is expected to be high, especially on the Budget day, where the market will witness wild swings in reaction to announcements by the finance minister. Traders are advised to exercise caution, avoiding undue risks until there is greater clarity.

Here is one buy call and one sell call for short term:

Samvardhana Motherson International: Buy | LTP: Rs 115.4 | Stop-Loss: Rs 109 | Target: Rs 121 | Return: 5 percent

Most of the automobile counters have been enjoying their dream run and now, some of the auto-ancillary stocks have started with their catch-up move.

Samvardhana Motherson International remained stable all this while but with Thursday’s colossal breakout amid challenging market environment, portrays immense strength in the counter.

We can see prices trading at the 2-year highest point and they have entered a zone where there are less challenges visible in the immediate future. Since the price upsurge is accompanied by robust volumes, we recommend buying on a decline up to Rs 113 for a trading target of Rs 121. The stop-loss can be placed at Rs 109.

Jubilant Foodworks: Sell | LTP: Rs 508.25 | Stop-Loss: Rs 527 | Target: Rs 493 | Return: 3 percent

This stock has been in a declining mode for the last four weeks. It has already corrected nearly 15 percent in such a short span and has now reached its major support zone of Rs 506 which coincides with the ‘200-day SMA’.

However, the way prices have confirmed a breakdown on Thursday’s session, this sacrosanct support is in jeopardy now. With ‘RSI-Smoothened’ continuing with its downward slope, there is no hope for any notable recovery in the coming week.

We recommend selling around Rs 512 - 514 for a near-term target of Rs 493. The strict stop-loss needs to be placed at Rs 527.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Sameet Chavan is the Vice President - Technical and Derivatives at Angel One Ltd.

first published: Jan 29, 2024 06:14 am

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