BackWait for Lok Sabha election 2024 outcome to keep market volatile; experts recommend buying these 6 stocks for short-term
Nifty 50 has been in the negative since last Friday. The index hit its all-time high of 23,110.80 on Monday, May 27, but succumbed to profit booking at higher levels due to fragile underlying sentiment in the run-up to the election outcome.
PremiumLok Sabha election-related nervousness has kept the Indian stock market on a bumpy track over the last few weeks, and experts believe this trend may continue until the election outcome on June 4. On Wednesday, May 29, Indian stock market benchmarks fell almost a per cent each in intraday trade as investors remained in the 'wait-and-watch' mode.
Nifty 50 has been in the negative since last Friday. The index hit its all-time high of 23,110.80 on Monday, May 27, but succumbed to profit booking at higher levels due to fragile underlying sentiment in the run-up to the election outcome.
Volatility index India VIX has surged 90 per cent in May so far.
Experts say that although the market remains hopeful for the return of the BJP-led NDA, investors are keen to see whether the alliance will secure a sufficient majority to continue policy reforms and to execute policy decisions confidently.
Also Read: Is the Indian stock market fairly valued or overvalued? Experts weigh in
"The nervousness in the market continues with uncertainty regarding the election results. An important sustaining trend during this uncertain phase is the continuous buying by DIIs (domestic institutional investors), which has reached around ₹45,000 crore so far this month. This can be interpreted as reflecting the expectation of political stability after the election results. However, it appears that retail and HNIs are in a wait-and-watch mode," said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The market is expected to remain volatile for the next few days. However, experts still see opportunities across sectors as they recommend buying quality stocks on dips.
Here are six stocks that experts believe can give healthy double-digit returns in the next 1-3 months. Take a look:
Expert: Ruchit Jain, Lead Research, 5paisa.com
Exide Industries | Last traded price (LTP): ₹509.80 | Target price: ₹585 | Stop loss: ₹440 | Upside potential: 15%
The stock has been forming a higher top and higher bottom structure and is in an uptrend.
In the recent move, the volumes were much higher than the average and low during the correction.
The RSI oscillator is hinting at continuing this trend, and hence, traders can look for buying opportunities in this stock.
"Positional traders can buy around the current market price of ₹494 and look to add on any dips towards ₹475 for potential targets of ₹550 and ₹585. The stop loss on long positions should be placed below ₹440," said Jain.
Mphasis | LTP: ₹2,399.25 | Target price: ₹2750 | Stop loss: ₹2270 | Upside potential: 15%
IT stocks have gone through a corrective phase over the last few months, and Mphasis has seen a price-wise correction along with the sector.
However, the stock recently formed a strong support base of around ₹2,200 and has given a breakout from a falling wedge pattern, usually seen at the end of the corrective phase.
The volumes have started picking up gradually, and the RSI oscillator on the daily and weekly charts hints at positive momentum.
"Positional traders can buy the stock around the current market price of ₹2,440 and add on any dips towards ₹2,370 for potential targets of ₹2,600 and ₹2,750. The stop loss on long positions should be placed below ₹2,270," said Jain.
Rashtriya Chemicals and Fertilizers (RCF) | LTP: ₹157.05 | Target price: ₹198 | Stop loss: ₹145 | Upside potential: 26%
The stock has broken out from its consolidation phase, supported by good volumes. The RSI oscillator is positive and hints at bullish momentum.
The 40 DEMA at ₹146 is good short-term support, and until prices are trading above this average, it has the potential to rally higher.
"Positional traders can look to buy the stock in the range of ₹164-160 for a potential target of ₹198. The stop loss on long positions should be placed below ₹145," Jain said.
Expert: Milan Vaishnav, CMT, MSTA, the founder and technical analyst of Gemstone Equity Research and ChartWizard FZE
TCS | LTP: ₹3,840 | Target price: ₹4,500 | Stop loss: ₹3,600 | Upside potential: 17%
The stock staged a multi-year breakout when it moved past ₹3,975 level early this year. However, it is seen consolidating following a retracement.
The IT space is currently underperforming the broader markets on relative terms. However, it is seen improving its relative momentum.
"Over the coming months, the stock, which has support at ₹3,600 level, can test all-time highs. The levels of ₹4,400--4,500 can be expected," said Vaishnav.
Also Read: What's driving the rally in auto stocks? Experts recommend 10 stocks to buy
ITC | LTP: ₹428.90 | Target price: ₹490 | Stop loss: ₹400 | Upside potential: 14%
The stock is currently seen resisting its 200-DMA. On the weekly charts, it is seen resisting its 50-week moving average after coming from its high point and forming a lower top.
The FMCG space has shown a strong spike in its relative momentum against the broader Nifty 500 index.
The markets are expected to see traditionally defensive space doing well over the coming months.
"ITC, which has support at ₹400, can rise and test ₹461 and ₹490 levels over the coming weeks," said Vaishnav.
HDFC Bank | LTP: ₹1,530.50 | Target price: ₹1,760 | Stop loss: ₹1,490 | Upside potential: 15%
The stock has been in a broad trading range for the last few years. Apart from forming an incremental high in July last year, the stock has practically stayed in a trading range without achieving a breakout.
On the weekly charts, the stock has managed to hold a 200-week moving average and is currently resisting its 50-and 100-day moving averages.
It is showing improvement in its relative strength; this may well continue over the coming months.
"With support in the ₹1,470-1,490 range, the stock is well poised to go above ₹1,725-1,760 levels over the coming months," said Vaishnav.
Read all market-related news here
Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!
