Kunal Bothras 2 top trading ideas for Monday
What have you made of the Nifty consolidating in the context of Bank Nifty underperforming?
A balancing act is going on. You can call it churning. You can call it baton getting shifted from one sector to the other. Bank Nifty underperformed for good part of last week thanks to a couple of selling pressures in the large cap private sector banks.
But largely, the sectoral rotation is playing a good part because a lot of the beaten down sectors – metal, pharma –are making a good comeback. Stocks are making or breaking their key long-term moving averages and that is a very healthy sign.
The erstwhile weaker sectors are getting into a stronger kind of mode. The only catch in terms of very short-term parameters was the unwinding of 11,500 put option. I just saw the data at the closing on Friday and that could be the only catch in the range which was 11,500 as support and 600 as a tight range. It could get a bit broader and you might see the index coming back to the 11,400 and 600 zone.
I expect that on Monday or Tuesday, you might see some bit of trimming on the Nifty but largely, the bullish trend is still intact on a positional basis.
What happened in capital goods? L&T of course announced that buyback. Even before the buyback, the quantum of the pricing was announced. There was a big move come in L&T as it was the first-ever buyback from the conglomerate and after that on Friday you saw big move in BHEL as well. What are the two charts telling you?
Led by the move on L&T, a lot of the other tier II names, midcap names, should make a decent comeback because the sector push is getting better and sectoral charts are getting better. After L&Ts comeback, yet another largecap has started to participate.
All those missing parts are now getting filled in. The timing is apt and with L&T breaking the key resistance of 1300-1310 on closing basis for the entire week, it now signals the restart of a good positional medium term uptrend.
It should also in effect have a positive rub-off on names like BHEL and the other capital goods/infra names. The overall sector could see a bit of additional buying largely led by L&T, which I believe, should head towards Rs 1420-1430 levels in a short span of time.
What are your trading ideas for Monday?
Pharma stocks are definitely in momentum and my top idea would be Aurobindo Pharma. After that triangular pattern last week from Rs 620 levels, the stock has moved up smartly to 695 levels. But I believe that even at current juncture, there is a strong momentum. Volume patterns are very supportive and from a positional play, you could look at Rs 735-740 as a target range in Aurobindo Pharma. I would recommend a buy. Stop loss could be kept closer to Rs 665-666 odd mark.
The second would be RBL Bank. On one hand, when most of these banking stocks are seeing individual selling pressure, RBL Bank has made a fresh life-time high. The volumes last week were almost at a five-week high and the stock also has come out of a decent consolidation.
I believe this could be start of a new uptrend for RBL Bank. It is a buy, target at Rs 655, stop loss Rs 585.