Stock in focus: Rajesh Palviya of Axis Securities recommends Bharat Electronics, Ashok Leyland, and APL Apollo today

Stock Market News: Domestic equity benchmark indices, the Sensex and the Nifty 50, began Friday's session on a flat note. Auto stocks saw gains offset by a decline in financial sectors, and a global rally sparked by expectations of a US interest rate cut fizzled out.

As of 9:20 IST, the blue-chip NSE Nifty 50 fell 0.08% to 22,386.20 points, while the S&P BSE Sensex fell 0.10% to 73,581.50.

The market is expected to benefit from a number of favourable domestic and international cues, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Rate cuts by the Fed are likely as a result of the US economy's soft landing, as seen by the drop in inflation to 3.4% YoY in April and the slowdown in retail sales.

Regarding market trends, Vijayakumar clarified that the market's potential for recovery might be aided by the net institutional purchasing becoming positive, the Nifty's fast rebound of roughly 350 points from its lows, and the sizeable short position in the market. News from the political front is probably going to get better from now on. Stocks with a high FII weight, which took the brunt of selling, should continue to rise.

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Share Market Tips and Nifty 50 Outlook by Rajesh Palviya, SVP - Technical and Derivatives Research, Axis Securities

Since the past 10–12 weeks, the benchmark index has continued to consolidate within the 22,800–21,700 levels, indicating a short-term sideways trend. Hence, any breakout on either side will indicate further direction. The index is well placed above its 20, 50, 100, and 200-day SMA, which reconfirms a bullish trend. The short-term support zone is placed around 22,000–21,800 levels, whereas on the upside, it may extend a rally towards 22,700–22,800 levels, said Rajesh Palviya, SVP, Technical and Derivatives Research, Axis Securities.

The daily strength indicator RSI has turned bullish, which indicates rising strength.

The Nifty 50 in the current series has witnessed a short build-up with a price cut of 0.80% (180 points) and an increase in open interest of 21%. As per the options data for the weekly expiry scheduled on May 23rd, 22,800 and 23,000 call strikes have a high OI concentration, indicating a strong resistance, while on the put side, a high open interest concentration was in 22,200 and 22,400, acting as support, while the pivotal level will be 22,500, explained Palviya. 

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Stock in focus today - Stock recommendation for Friday by Rajesh Palviya

Bharat Electronics Ltd (BEL) (CMP: ₹240)

The stock is in a strong uptrend across all the time frames, forming a series of higher tops and bottoms, indicating a positive bias. The stock is well placed above its 20, 50, 100, and 200-day SMA, and these averages are also inching up along with the price rise, which reconfirms a bullish trend. The daily and weekly strength indicator RSI is in positive terrain, which signals rising strength. Rising volumes signify increased participation. Investors should buy, hold, and accumulate this stock with an expected upside of 250–265 and a downside support zone of 227–225 levels, said Rajesh.

BEL today has seen marginal price gains of 0.52% in current expiry and an increase in open interest of 12% as per provisional data, indicating a long buildup. In the May series, there has been a high OI concentration at 250 call strikes, followed by 260, indicating a probable resistance zone, while strong support is seen at 230 and 220 levels as significant OI concentration on the put side has been seen, explained Palviya.

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Ashok Leyland (CMP: ₹206)

In the weekly time frame, the stock has decisively broken out of its 8–10 month "consolidation zone" (192-160) on a weekly closing basis. This breakout is accompanied by huge volumes, which signals increased participation. The weekly and monthly "band Bollinger" buy signal shows increased momentum. The daily, weekly, and monthly strength indicator RSI is in positive terrain which signals rising strength, said Rajesh. 

Investors should buy, hold, and accumulate this stock with an expected upside of 218–230 with a downside support zone of 200–194 levels, advised Palviya.

Ashok Leyland increase in open interest of 21% (as per today’s provisional data). In the May series, there has been a high OI seen at 210 call strike followed by 215 and 220, indicating a probable resistance zone, while support is seen at 200 followed by 190 and 195, explained Rajesh.

APL Apollo Tubes Ltd (CMP: ₹1,625)

The stock has experienced a 6-8 months Down-sloping trendline breakout at 1600 levels on a closing basis. This signifies a trend reversal on the short-term charts. The stock has recaptured its 20, 50, 100 and 200-day SMA and rebounded sharply, which reconfirms bullish sentiments. The past four sessions' rising volumes signify a strong comeback of bulls. The daily and weekly RSI is in a positive terrain, which shows rising strength. The daily "band Bollinger" buy signal shows increased momentum, said Palviya.

Investors should buy, hold and accumulate this stock with an expected upside of 1,700-1,785 with a downside support zone of 1,580-1,500 levels, advised Rajesh.

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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.