Buy or sell: Ruchit Jain of 5paisa recommends buying United Spirits and Apollo Hospitals stock this week

Stock Market News: Amid mixed cues in global markets, the domestic equities benchmark indexes, the Sensex and the Nifty 50, concluded Monday's trading session down. Following Dalal Street's positive start on Monday, profit-booking took control, and Nifty 50 was unable to cling onto Friday's gains.

Furthermore, Bank Nifty significantly underperformed the benchmarks, closing the day down 1.65% compared to Nifty 50's losses of -0.76%. Broader markets did too poorly, with the Nifty Smallcap Index closing 4.01% worse.

The 30-share BSE Sensex ended lower by 523 points or 0.23% at 71,072.49 level while the Nifty 50 closed at 21,616.05 level, down 166.45 points or 0.76%.

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Analysts speculated that part of the disappointment may also be attributed to concerns about the inflation data, which are expected to be released this week in the US and India.

According to official data issued on Monday, the mining and power generating divisions experienced a decline in performance, leading India's industrial output growth to decelerate to 3.8% in December 2023. December 2022 saw a 5.1% increase in manufacturing output as indicated by the Index of Industrial Production (IIP).

"An uptick in exchange margin requirements caused a decrease in positions, primarily in mid and small caps. Aside from the pharma and IT sectors, selling was widespread, with notable struggles seen in PSU banks. The premium valuation gap between mid to large caps has notched to its all-time high. Despite a robust economic forecast, corporate earnings are expected to slow due to moderated operating margins. It is going to be a challenge for the broad market to sustain the premium valuation. Large caps are predicted to excel amid consolidation," said Vinod Nair, Head of Research, Geojit Financial Services.

Also Read: Stock market today: Nifty 50, Sensex end lower; midcaps, smallcaps bleed; investors lose over ₹7 lakh crore in a day

Stock Market Last Week

In the week gone by, Nifty 50 had consolidated within a narrow range, but there was no lack of stock-specific momentum. The heavy weights from sectors such as PSU Banks, Oil & Gas, and Pharma outperformed, while private banks and FMCG stocks underperformed to drag the markets lower. Nifty 50 was unable to sustain above the 22,000 mark, and it ended the week below 21,800 with a weekly loss of one-third of a percent, said Ruchit Jain, Lead Research Analyst at 5paisa.

The Nifty 50 has been consolidating in a range for the last few days, and if we look at the chart structure, recently the index formed a bearish ‘Shooting Star’ candle on the daily chart, and the recent high around 22,127 also resembles a ‘Double Top’. The index has not yet negated the pattern, which is a sign to be cautious in the near term. Also, the FIIs have formed short positions in the index futures segment, with around 67 percent of the positions on the short side, and have sold equities in the cash segment. This combination of selling in the cash segment and short formations in the index futures generally leads to corrective phases, according to Jain.

Also Read: Twin boost for economy as factory output powers up, retail inflation cools

Share Market Tips For This Week 

Now, the above analysis (technical and derivatives data) does not seem much bullish, and thus our markets could go through either a time-wise corrective phase (consolidation) or a price-wise corrective phase, explained Ruchit Jain.

The 20 DEMA support is placed at around 21,680, which would be seen as a crucial support on a closing basis. A close below this support could result in a correction towards the 21,450–21,400 zone. On the higher side, the index needs to surpass the recent swing high of 22,127 to negate the reversal pattern formed, which would then result in a continuation of the uptrend.

"Traders are advised to stay cautious and avoid aggressive longs at current levels until we see a breakout beyond the above-mentioned range. Trading on stock-specific momentum could be a better approach at the current juncture," advised Ruchit.

Also Read: No review of action against Paytm Payments Bank: RBI gov Shaktikanta Das

Stocks To Buy This Week - Ruchit Jain

On stocks to buy this week, Ruchit Jain recommended two stocks - United Spirits Ltd and Apollo Hospitals Enterprises Ltd.

Here we list out full details in regard to Ruchit Jain's stock recommendations:

United Spirits Ltd

According to Jain, the stock has consolidated in a range in the last few weeks, which seemed to be a time-wise corrective phase. In this entire consolidation, the 89-day EMA has acted as good support for the stock. The RSI oscillator has given a positive crossover, which hints at positive momentum, and thus the stock could resume its uptrend. Hence, short-term traders can look to buy the stock in the range of ₹1,110–1,100 for potential targets of ₹1,170 and ₹1,220. The stoploss on long positions should be placed below ₹1,050.o 

Apollo Hospitals Enterprise Ltd

Ruchit stated that the stock has been forming a ‘Higher Top Higher Bottom’ structure and is thus in an uptrend. The prices are riding above the 20 DEMA support, and volumes were good along with the price upmove during last week. Short-term traders can look for buying opportunities in the stock in the range of ₹6,440–6,420 for potential targets of ₹6,680 and ₹6,850. The stoploss on long positions should be placed below ₹6,200.

Also Read: Oil prices slip after rally last week on Middle East conflict, brent crude at $81.65/ bbl

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.